Looking For a Whole Life Policy

[stevew7]

What I have illustrated in stopping premiums after 10 years and taking the policy paid up does not make it MEC. The reason for the confusion is that in running illustrations taking a policy paid up is an option not something that automatically happens. So NML does not want to mislead and make you think that overfunding to this degree is possible over the lifetime of the contract.

Hi Chuckles21,

Thanks for the clarification on the NWML policy not MECing out since you changed it to paid up in year 10. Then, yes, I'd agree this NWML policy is substantially similar to the SBLI policy I posted earlier (and even has nearly the same annual premium). In fact, it has a little additional flexibility because I could continue to contribute to it for a few years past year 10, before I'd have to stop to prevent it from becoming a MEC.

However, the SBLI WL 10 pay policy is run with a 5% dividend scale, while you ran your illustration with a 6% dividend scale. That explains why your illustration is able to "catch up" and outperform in later years, even though SBLI's policy has higher guaranteed values and higher early cash values.

I appreciate the advice and opportunities to learn from others on this thread. I understand SBLI is a much smaller company than Guardian and NWML and several others mentioned here, and understand some agents would not use SBLI for this reason (among others), but for my purposes (slightly atypical as posted on this thread), the policy is a good fit.

At this point, unless I am misunderstanding UL/IUL policies, I am favoring whole life - if I happen to beat the odds and live to an old age, I will have a fully paid up death benefit for my family, whereas in a UL policy, the cost of insurance will be through the roof as I get older. Furthermore, since this SBLI WL policy maintains high cash values early, I can easily borrow against the dollars in the policy (paying interest of course) earlier on in my lifetime, while still allowing the dividends to grow tax deferred. This appears to beat what I had initially planned to do with buying a (relatively) cheap term policy and investing the difference in lower risk bond funds and bank CDs/savings accounts.

I just heard back from the SBLI agent yesterday, and was approved for their highest underwriting rating tier, and expect the policy in a few days. I will let the group know if there were any unexpected changes. If there's a better option out there, I'd love to hear about it. I think I've got 30 days to change my mind on this policy.

 

[Chuckles21]

Hi Chuckles21,

Thanks for the clarification on the NWML policy not MECing out since you changed it to paid up in year 10. Then, yes, I'd agree this NWML policy is substantially similar to the SBLI policy I posted earlier (and even has nearly the same annual premium). In fact, it has a little additional flexibility because I could continue to contribute to it for a few years past year 10, before I'd have to stop to prevent it from becoming a MEC.

However, the SBLI WL 10 pay policy is run with a 5% dividend scale, while you ran your illustration with a 6% dividend scale. That explains why your illustration is able to "catch up" and outperform in later years, even though SBLI's policy has higher guaranteed values and higher early cash values.

I appreciate the advice and opportunities to learn from others on this thread. I understand SBLI is a much smaller company than Guardian and NWML and several others mentioned here, and understand some agents would not use SBLI for this reason (among others), but for my purposes (slightly atypical as posted on this thread), the policy is a good fit.

At this point, unless I am misunderstanding UL/IUL policies, I am favoring whole life - if I happen to beat the odds and live to an old age, I will have a fully paid up death benefit for my family, whereas in a UL policy, the cost of insurance will be through the roof as I get older. Furthermore, since this SBLI WL policy maintains high cash values early, I can easily borrow against the dollars in the policy (paying interest of course) earlier on in my lifetime, while still allowing the dividends to grow tax deferred. This appears to beat what I had initially planned to do with buying a (relatively) cheap term policy and investing the difference in lower risk bond funds and bank CDs/savings accounts.

I just heard back from the SBLI agent yesterday, and was approved for their highest underwriting rating tier, and expect the policy in a few days. I will let the group know if there were any unexpected changes. If there's a better option out there, I'd love to hear about it. I think I've got 30 days to change my mind on this policy.

steve7,

Congrats on the premier rating. Let me ask you this. Why do you think they have such a high cash value early on?

I did illustrate dividend at 6% because that is what our current dividend is. They illustrated at 5% because that's what there's currently is. NML has always had a higher dividend rate than SBLI and actually has a history of dividend payout to back it up. NML has paid a dividend on it's life insurance policies every single year for the last 139 years starting in 1872. SBLI has only been around 20 years and has only a short 18 year history of dividend payout.

A permanent life contract should be thought of as a long term marriage with the company. You are putting your trust in a company with a short track record who's dividend has lagged behind ours each year they have been in existence. They lure you in with high cash values early on with almost no expenses, it seems, but give you less of a benefit for the life of the contract.

Using the cash value from a policy is not smart to do early on unless you plan on paying it right back. So the short term performance of this product is not what you should be focusing on. This product is meant to be there for life and perform for life of which there is no arguing which is better in the long run.

Back in 2005 SBLI was only in 15 states. As of right now I am pretty sure they are in all 50. My take on what they are doing is luring people in with great promises with not much to back them up. Their own annual reports show how much they have been growing but in those same reports it shows them paying out less each year for dividends.

In this, link here, annual report of there's from 2008-2009, most recent I could find, they had a gain in revenues of roughly $82million year over year, yet paid out roughly $10 million less in dividends. Tell me how that makes any sense.

By the way from there 2005 annual report, link here, it shows them paying a greater dividend in 2005, roughly $50 million, than in 2009, roughly $33 million, even though they show that during that time frame their overall life insurance in force was up roughly 50%. So let's recap 50% more life coverage amount in force, yet paying out less total in dividends.... hmmmm not tough to see where this is headed.

Do what you want, but the writing on the wall is not good and don't complain when your policy performs nothing like what is illustrated. Illustrations mean nothing without performance backing them up. SBLI has no such performance to speak of.

 

[VolAgent]

Chuckles, step back from the kool-aid. Everyone paid lower dividends in 2009. And you should know, adding new policies in expensive. They don't generate profits early on.

 

[Larry Tew]

steve7,

Congrats on the premier rating. Let me ask you this. Why do you think they have such a high cash value early on?

I did illustrate dividend at 6% because that is what our current dividend is. They illustrated at 5% because that's what there's currently is. NML has always had a higher dividend rate than SBLI and actually has a history of dividend payout to back it up. NML has paid a dividend on it's life insurance policies every single year for the last 139 years starting in 1872. SBLI has only been around 20 years and has only a short 18 year history of dividend payout.

A permanent life contract should be thought of as a long term marriage with the company. You are putting your trust in a company with a short track record who's dividend has lagged behind ours each year they have been in existence. They lure you in with high cash values early on with almost no expenses, it seems, but give you less of a benefit for the life of the contract.

Using the cash value from a policy is not smart to do early on unless you plan on paying it right back. So the short term performance of this product is not what you should be focusing on. This product is meant to be there for life and perform for life of which there is no arguing which is better in the long run.

Back in 2005 SBLI was only in 15 states. As of right now I am pretty sure they are in all 50. My take on what they are doing is luring people in with great promises with not much to back them up. Their own annual reports show how much they have been growing but in those same reports it shows them paying out less each year for dividends.

In this, link here, annual report of there's from 2008-2009, most recent I could find, they had a gain in revenues of roughly $82million year over year, yet paid out roughly $10 million less in dividends. Tell me how that makes any sense.

By the way from there 2005 annual report, link here, it shows them paying a greater dividend in 2005, roughly $50 million, than in 2009, roughly $33 million, even though they show that during that time frame their overall life insurance in force has more than tripled. So let's recap 3 times the policy amount in force, yet paying out less total in dividends.... hmmmm not tough to see where this is headed.

Do what you want, but the writing on the wall is not good and don't complain when your policy performs nothing like what is illustrated. Illustrations mean nothing without performance backing them up. SBLI has no such performance to speak of.

Sigh. I could make a joke or make a light-hearted jab, but the reality is that your whole post is sad and uninformed. I respect everyone's current level of knowledge, but give me a break!

At least the other agents who feel the need to show off for the "maybe consumers" (wrong section by the way) are factually accurate. Just one example from above:

"In this, link here, annual report of there's from 2008-2009, most recent I could find, they had a gain in revenues of roughly $82million year over year, yet paid out roughly $10 million less in dividends. Tell me how that makes any sense."

It makes perfect sense if you know how a company budgets for reserves and future dividends. It would appear that your understanding is that a company must pay that year's dividends from THAT YEAR'S operating gain. Just plain wrong.

This is the 2nd post in this thread that I just had to call out. I don't want to get the wrong reputation here, but for crying out loud! It's one thing to say "I THINK this is how it works" or "HOW does it work", but when you say "THIS is how it works" and you're not even close... you will get called on it by someone.

 

[Chuckles21]

Chuckles, step back from the kool-aid. Everyone paid lower dividends in 2009. And you should know, adding new policies in expensive. They don't generate profits early on.

Vol,

They have been paying less in dividends every year starting in 2004 from what I can tell. How do you account for that. Also, I know it costs to put policies in place, but they also illustrate policies receiving a dividend in there first year. So again more policies in force, that are receiving a dividend, yet less total dividends paid out..... something isn't adding up. Learn to investigate a little before commenting.

 

[VolAgent]

Vol,

They have been paying less in dividends every year starting in 2004 from what I can tell. How do you account for that. Also, I know it costs to put policies in place, but they also illustrate policies receiving a dividend in there first year. So again more policies in force, that are receiving a dividend, yet less total dividends paid out..... something isn't adding up. Learn to investigate a little before commenting.

Why they pay dividends in the first year is beyond me as it is almost impossible for the business to be profitable yet. Adding a ton of new business would have added massively to their reserves.

Are they as financially strong as NML, of course not. But there is a reason their dividend has been slipping of late, and its not because they are in trouble.

 

[Chuckles21]

Sigh. I could make a joke or make a light-hearted jab, but the reality is that your whole post is sad and uninformed. I respect everyone's current level of knowledge, but give me a break!

At least the other agents who feel the need to show off for the "maybe consumers" (wrong section by the way) are factually accurate. Just one example from above:

"In this, link here, annual report of there's from 2008-2009, most recent I could find, they had a gain in revenues of roughly $82million year over year, yet paid out roughly $10 million less in dividends. Tell me how that makes any sense."

It makes perfect sense if you know how a company budgets for reserves and future dividends. It would appear that your understanding is that a company must pay that year's dividends from THAT YEAR'S operating gain. Just plain wrong.

This is the 2nd post in this thread that I just had to call out. I don't want to get the wrong reputation here, but for crying out loud! It's one thing to say "I THINK this is how it works" or "HOW does it work", but when you say "THIS is how it works" and you're not even close... you will get called on it by someone.

Larry,

Thanks for the correction, as I do know that dividends are credited on the anniversary of a policy. The fact remains though that as more policies are being put in place, i.e. more eligible for a dividend, less of a dividend is being paid out. There are no two ways around it.

Also I said nothing about the operating gain, merely revenues, which are a good indication of growth.
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Why they pay dividends in the first year is beyond me as it is almost impossible for the business to be profitable yet. Adding a ton of new business would have added massively to their reserves.

Are they as financially strong as NML, of course not. But there is a reason their dividend has been slipping of late, and its not because they are in trouble.

Agree on the first point. Wondering if you could expand why you think it is happening in your second point.

 

[VolAgent]

Agree on the first point. Wondering if you could expand why you think it is happening in your second point.

Many reasons, lots of new business and slipping interest rates are the primary causes. May have had a bad bond or two as well. They may also be protecting their reserves and surplus to protect their rating. You should be familiar with that NML has done the same thing.

 

[BNTRS]

I wish I wasn't high on Benadryl right now. That way I might have the attention span to read some of this stuff.

 

[padthaiforlunch]

I'm drinking water and can only bear to skim read the last 30 posts.