1035 from NML WL 65 to MM 20 Pay

[scatteredRubbish]

I posted on here a year or so ago about a policy I was sold straight out of college with little knowledge of life insurance (I am 24 year old Software Engineer in good health.). After a some research and this forums's advice/help I decided to hold onto the policy, which I'm glad I did. However, when the policy was sold to me I had no idea what I was getting into or even why I should have or want PLI - the adviser selling it to me worked for a family member and I somewhat blindly trusted him. The policy was not designed/built with cash value as a priority, which to me now, is a priority. I've been working with an adviser that can sell Mass Mutual policies, and the illustrations for their 20 pay seem way more on par with what I'm looking for out of PLI. I'm two years into my NML WL 65 policy and have about ~1.6k CV in it. Does it make sense to 1035 the CV in my NML policy to a 20 pay at MM?

I can post more information about my situation on request (policy information, my budget/income, or illustrations for the 20 pay, etc).


Thanks!

 

[ktmorgan]

Without knowing the exact details of your situation (family, job, income, expenses, children, etc) it's hard to answer with any kind of relevance. However regardless what you have now or what you've been proposed I can give you something to look for that you will likely not be offered by any retail Captive agent.

First, seek out an agent who really knows what he's doing and who can offer products from any company. That way he/she can shop the entire marketplace for the best policy that fits your specific situation and is not under pressure to sell his company's products. Some Captive agents are forbidden from showing anything other than their own products. And make sure that they're working for your benefit, not theirs. In other words seek out a Fiduciary to help you out to provide a wide variety of options for your benefit.

Then, you might want to have that person create a WL policy with a "Paid-Up Additions Rider" which then is "blended" w/an appropriate amount of term insurance to bring down the amount of Death Benefit. This "PUA Rider" will allow you to "Super Charge" your cash value accumulation. Which sounds like from what little you've described is what you're trying to do.

Also, when you have large amount of DB the internal charges and "cost of insurance" of the policy to carry that high DB is going to be expensive. You being a young healthy person it's unlikely that you need to large DB. So you're likely paying much more than you need to be for something you might not need. That's wasted money.

The reason that you will likely never hear of this type of arrangement from most agents is that what I've just described (in VERY abbreviated, general terms) will help stuff your policy with a lot cash in the early years and then continue to do so through out the life of the policy. The PUA Rider really help your cash accumulation opportunity. Again, if this is right your specific situation.

Additionally, there's something else that has to give somewhere. One of reasons that you can get a lot of your paid premium into cash value in the early years is that the commission for the agent is drastically cut with a WL policy that is "Blended w/Term." That excess money that doesn't go to agent commission goes into your cash value.

This is considered a wholesale policy by some people. This type of set up is never offered by some agents because they do not want their commissions to be cut. Others will only do it for really big cases. And still others are never taught by their company's trainers how to do it, therefore they're not even aware of the possibility.

There many agents out there who do the right thing by their clients, and there are many who don't or are not capable of doing so.

Seek out a Fiduciary and/or someone acting in your best interest. Get a 2nd, 3rd and even 4th opinion. You might be surprised by what shows up when you ask around.

Good Luck.

I posted on here a year or so ago about a policy I was sold straight out of college with little knowledge of life insurance (I am 24 year old Software Engineer in good health.). After a some research and this forums's advice/help I decided to hold onto the policy, which I'm glad I did. However, when the policy was sold to me I had no idea what I was getting into or even why I should have or want PLI - the adviser selling it to me worked for a family member and I somewhat blindly trusted him. The policy was not designed/built with cash value as a priority, which to me now, is a priority. I've been working with an adviser that can sell Mass Mutual policies, and the illustrations for their 20 pay seem way more on par with what I'm looking for out of PLI. I'm two years into my NML WL 65 policy and have about ~1.6k CV in it. Does it make sense to 1035 the CV in my NML policy to a 20 pay at MM?

I can post more information about my situation on request (policy information, my budget/income, or illustrations for the 20 pay, etc).


Thanks!

 

[scatteredRubbish]

I'm not sure if the agent I'm working with is captive or not, I know he's not directly employed my MM. I approached him asking for illustrations and he's been very transparent with me, is not trying to push any sale, and is honestly trying to design the type of policy I'd like. I can go back to him and ask for illustrations on a blended type policy, I'm not locked into anything or definitely making any moves. I know for sure he as access to Mass Mutual product line, though if that is any help for what I can ask for him to draft up. Could you describe in a bit more detail what a blended WL policy would like, and if you're familiar with MM what I could specifically ask for in a policy design/product choice.

I'm currently paying $3600/annually for the NML 65 policy and would be looking to transition to the MM 20 pay paying $4800/annually. The guaranteed CV's come out way ahead with 20 pay MM with the added benefit of being done funding it by age 44 rather than 65. We looked into adding MM's ALIR rider which is essentially the PUA rider I believe, and the policy kept MEC'ing.

 

[walthamny]

You should talk to an independent insurance agent who can advise you. NW is a fine company. It is not like your family friend sold you some junk. By changing the whole life policy to an earlier paid up policy, you will have higher cash value. Whether that is better for you or not, or whether that is in your best interest who knows. Just because you want higher cash value now does not mean that is the best solution for you. A salesman will sell you any product you wish. Instead of focusing on riders of WL, you should focus on finding an advisor who can advise you and work with you. And try to stay away from insurance advisors who will compare whole policies based on cash value only. Those are generally insurance salesmen.

By the way, I am also Engineer by training. When I was your age, I over and over analyzed products, without seeing which one fits my own personal financial strategy. You generally buy permanent life policies for several financial advantages and you can't always quantify each of these advantages. Use an independent advisor who can guide you.

 

[jboussea]

I'm not sure if the agent I'm working with is captive or not, I know he's not directly employed my MM. I approached him asking for illustrations and he's been very transparent with me, is not trying to push any sale, and is honestly trying to design the type of policy I'd like. I can go back to him and ask for illustrations on a blended type policy, I'm not locked into anything or definitely making any moves. I know for sure he as access to Mass Mutual product line, though if that is any help for what I can ask for him to draft up. Could you describe in a bit more detail what a blended WL policy would like, and if you're familiar with MM what I could specifically ask for in a policy design/product choice.

I'm currently paying $3600/annually for the NML 65 policy and would be looking to transition to the MM 20 pay paying $4800/annually. The guaranteed CV's come out way ahead with 20 pay MM with the added benefit of being done funding it by age 44 rather than 65. We looked into adding MM's ALIR rider which is essentially the PUA rider I believe, and the policy kept MEC'ing.

Make sure he's also adding a term rider so you know he's truly doing it to the MEC Limit..

Also find out if he sells Penn Mutual as well. .cause PM might also do pretty well.

These guys are good people to ask

http://theinsuranceproblog.com/

 

[aclaro]

You should be able to put in ALIR with the 20 pay. It's their 10 pay that doesn't have room for it. Using LISR is how to design it from a blend prospective.

The other thing you can do is take a longer policy like a pay to 65 and you can do a reduced paid up policy when you want to stop funding it. That may give you a little more flexibility from the funding side.

Just have to run them and see how it looks.

NW dividend had been taking a beating where as MM had been a top performer through some tough financial times.

 

[scatteredRubbish]

Thanks for the info, 1035'ing my current CV into it as ALIR and using 20 pay with a premium of $4800/yr won't even allow for the option to do the minimum additional ALIR rider at $300/yr without causing it to MEC in like year 19.

He's going to run some blended illustrations this week to see if he can come up with anything competitive for what we're looking for with the 20 pay. The 20 pay itself it is definitely seems way more attractive to me than the policy I'm holding onto right now. Are there any significant downsides to swapping out policies like this?

 

[pfg1]

The only main downside of swapping...
a new contestability period, which is not a huge deal...
a loss of some premiums paid in
if you go with a 20pay, you have no option to pay longer should you want to in the future.

I would also look at what aclaro said... a pay to 65 or life pay, max funded.... then you can RPU it at some point should you want to. Your situation in the future may have you wanting to pay premiums longer than 20yrs. Nice to have that option.