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Old 11-13-2009, 03:52 PM   #31
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Originally Posted by mx_599 View Post
in light of the new info, what do you all think of Direct vs Non-direct recognition?

sounds like NWM is not good for this. what if my agent does not offer Guardian? am i supposed to find someone else?

this issue sounds like a big enough deal for my purposes...

:(

mx
There's not reason he can't sell it, he'd have to simply choose not to. Now, Northwestern is a very drink-the-kool-aid-like company, they replace insurance contracts all the time simply because they don't say Northwestern Mutual at the top. So it might be tough for him to admit his home team might not be the best choice in this case.

My guess is your agent would disagree with me. Based on the fact that you are looking to accumulate assets and retire rather early, I'm having a hard time seeing NMFN as the right carrier.

The following is a lot of stuff, but here goes...

1.) The Fee NMFN is going to charge for over funding is quite high 9% compare others in the industry Massmutual at 7.5% Guardian at 5% and NYLife at 3%.

2.) You haven't stated, but my guess is he's recommending NMFN's adjustable comp life, which is a guaranteed paid up policy at age 90. The sooner something is guaranteed paid up the higher the premium. both Guardian and Massmutual have products that are paid up later, bringing a lower premium, meaning more over funding, which will yield higher cash values.

3.) Northwestern's waiver of premium rider (this should definitely be on your policy) has a 2 year own occupation disability definition, Guardian is 5. Meaing you can be sick or hurt and unable to practice, but still able to work doing something else and still receive benefits (in this case your policy premiums will be paid for by the insurance company).

4.) Northwestern will charge a higher modal factor when you pay your premiums monthly than Guardian. This one won't be a huge difference, especially at this point. It translates to about something in the range of 1-2 dollars more per month as a fee to NMFN.

5.) When it comes to loan interest rates (and this is only an issue if you never plan on repaying the loan, there are times when you might I'll explain more later if you wish) Northwestern will offer either a variable rate or a permanently fixed 8% rate. Guardian stats at 8% and drops to 5% after 20 years or age 65, which ever is sooner.

6.) Something we haven't talked about. Both companies will offer a excellerated benefit so you can access a portion of the death benefit if you become very sick. Northerwestern will give you access if you are terminally ill only and caps the benefit at $250,000. Guardian offers the benefit for both chronic and terminal illnesses (or the loss of two acitivites of daily living--no it's not long term care insurance, but it can act as a supplement) with no cap. Of course, the viatical and life settlement guys will tell you there are other options. There are, but this one leaves you in the most control

Both are strong, both have been around for a long time, and both have remained on the top of the financial strength lists for a long time. Northwestern is bigger, has slightly higher ratings from the crediting agencies, and likes to boast about paying the most dividends to it's policy holders out of all the companies in the industry. Guardian has been able to compete toe to toe for over 100 years, and had an amazing year last year and has maintained it's impressive financial strength this year, they also currently have a higher dividend rate, but as I and others have mentioned earlier that number is only a piece of the puzzle.

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Old 11-13-2009, 03:58 PM   #32
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Good post BNTRS - very informative. While I am not a proponent of whole life, you did a solid job explaining the things to look out for if making that decision.

Guardian also has the own-occupation definition on their disability product. One of our long-time clients bought an own-occupation disability policy from us when he was just out of med school as an OBGYN. Didn't think he'd really need it and sort of balked at the high premiums, but decided to do it. 10 months later was diagnosed with cancer. He is still alive today and doing well, but received about $150k/year on the disability policy (tax-free) for about 20 years and was still able to work in another position when he recovered to supplement that substantially.

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Last edited by dgoldenz; 11-13-2009 at 04:02 PM.
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Old 11-13-2009, 04:06 PM   #33
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Originally Posted by mx_599 View Post
forgot to mention, agent took care of MEC. my numbers are probably a little off, but he maxed out certain parameters to fall just below MEC

then i guess in a few yrs i would have to get a new physical and redo? the policy so i could start putting a lot more in and NOT be a MEC.

i dont know how i feel about disability. i am only doing family or maybe sports med. i would have to be f-ed up pretty bad to be "disabled". i dont know i am ready to bite that yet.

i am considering practicing bare...ie no malpractice insurance. any of you hear of this?

mx

ps i know the retire at 50 is probably a no go, but i believe in goal setting . obama is a jerk

92% of all disabilities are caused by illness not injury. Arthritis leads the list of causes. Others high on the list are cancer, heart disease, and mental nervous disorders. It's very hard to picture yourself sick or injured and unable to work, I know this.

Men have a 1 out of 3 chance of being out of work due to illness or injury for 6 months or more during their working years (between 18 and 65)

The odds are high, but think about the consequences.

50% of all personal bankruptcies are caused by disabilities

50% of all mortgage forcolsures are caused by disabilities.

You said you'd have to be pretty beat up and I agree. But what if you got pretty sick?

I know disabilities are for older people who don't take care of themselves. I too am a relatively young person in good health (run a lot and all that jazz) but I've seen too many cases where younger people got blind sided by things they never expected, and I may not remain healthy forever. the longer I wait the more it will cost, and I may come to the day that I can't get it. Keep in mind, your income drives all that you plan to do; without it, we wouldn't be able to have the conversation we're having now.

You want to retire at 50, but could you retire tomorrow? If the answer is no, I'd strongly encourage you to take another look at disability insurance.




As far as the MEC goes, you'd likely get another policy and begin over funding that when the time came for increased contributions. You can put a Guaranteed increase option on the policy. Again this is a point when I see Northwestern lagging a bit. They limit the GIO or $150,000, Guardian will give you up to 250,000 or your current death benefit. You could alternative put a very inexpensive term rider on your policy that you'd plan to convert to whole life inaurance later. Northwestern won't offer this feature. You'd need a seperate term policy to do it, which will likely cost a little bit more to do.
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Originally Posted by dgoldenz View Post
Good post BNTRS - very informative. While I am not a proponent of whole life, you did a solid job explaining the things to look out for if making that decision.

Guardian also has the own-occupation definition on their disability product. One of our long-time clients bought an own-occupation disability policy from us when he was just out of med school as an OBGYN. Didn't think he'd really need it and sort of balked at the high premiums, but decided to do it. 10 months later was diagnosed with cancer. He is still alive today and doing well, but received about $150k/year on the disability policy (tax-free) for about 20 years and was still able to work in another position when he recovered to supplement that substantially.
Why thanks, maybe I should have a posted tag somewhere that says "whole life expert"


With regards to the DI story. I too have seen things like this. I often tell clients it's an insurance policy you'll have a hard time justify having at first, but give it a few years and I'll bet I couldn't convince you to get rid of it.
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Last edited by BNTRS; 11-13-2009 at 04:16 PM. Reason: Posts merged
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Old 11-13-2009, 05:21 PM   #34
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Originally Posted by DHK View Post
Then you're an idiot and no amount of life insurance that you buy will help you with that.

I wouldn't even TALK to people about buying insurance unless I had E&O (errors & omissions) insurance.
DHK, I wouldn't call him an idiot for that. There is a trend of doctors practicing bare because E&O is so outrageous. They hold their assets in instruments protected from judgements or bankruotcy. In most situations life insurance is protected from judgements and bankruptcy. This sounds like a smart forward thinking individual to me. The danger of a personal judgement aren't too great if assets are untouchable. O.J. Simpson had a multi-million dollar verdict against him and was still able to live a life of leisure.

To me he sounds like he is thinking right concerning insurance. There is nothing wrong with NWML or Guardian but I would prefer a non-direct recognition company if I were planning on tapping the cash.

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Old 11-13-2009, 05:41 PM   #35
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Impossible to get that type of returns in conservative debt investments that most companies invest. Now, one can project better returns, but who knows. Interesting that the IRS considers life dividends as a refund of overpriced premiums. Get other options from other advisors. Ask the agent to do a IRR on policy equity. Never viewed WL as an attractive investment choice, a good risk management tool for some folks, but I can't think of a situation where it really fits.
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Old 11-13-2009, 06:09 PM   #36
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First off congrats on finishing up medschool. My son is 3rd year in St.Louis. This month he's obgyn-ing it.

Cash value Life insurance is a protected asset. To what level may depend on what state you reside in. But for the large part it is secure in the case of malpractice. Divorce, not so sure, cash values may be, but a good lawyer will make sure an ex has life coverage to ensure support payments. So your cash values might be protected, but death benefit assigned.

About the only one who can get cash values is uncle sam, so try not to p iss him off.

I don't know if I would overfund the policy to MEC status (ask your agent he'll explain) because if you plan to tap this a bit, you don't want to make dividend surrenders taxable. You will also do some other things too that you can tap.

One way to think about this purchase is you're buying a piece of inexpensive vacant land right now. Later on, depending on how your life goes, you may build your house upon it (married, kids). Some people wait and pay full price for the hosue on the lot, other people buy the lot and let it appreciate, then build their house at a lower cost.

Contrary to what some of my peers may believe, if you're healthy and have the ability to buy, even without the need, BUY SOME!
Cause later on when you have the need, and maybe aren't healthy your ability to buy will be severly tested.

I'm a 50 year old hypertensive type II diabetic and I am sooo dam glad I was "stupid and or foolish" and bought my whole life policies over 20 years ago when I was fit and healthy and didn't really need them, cause they didn't cost a hell of alot. There are some days when it is good to be that "stoopid".
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Old 11-13-2009, 08:26 PM   #37
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Did some additional research for my own edification. NMFN has a pretty hefty annual policy fee. It has a base 60 dollar fee, and a $3 per $1000 in death benefit fee.


I did confirm that NMFN has a different dividend rate for policy loans so the direct recognition deal isn't hugely a problem.
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Old 11-13-2009, 08:49 PM   #38
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You guys have all been great! Wow, I need some time to digest this info.

My agent is going to hate me now. Wouldn't you guys be annoyed with a client who starts throwing out all these questions/points from the collaborative efforts of the best minds in the country on insurance??? Especially after you thought it was a done deal? I have paid nothing yet. I guess I have not really officially signed anything yet either. This is going to be a tough decision...

I am new here, but certainly not new to forums. I think one of the best resources on the net are forums. I have no idea why I didn't post here prior to meeting this agent, oh well. You generally get expert advice on these forums. You take things with a grain of salt, sure...but you can tell when people know their stuff. The best I can offer you guys is some mountain bike or cycling advice on those forums! hahaha I'm such a loser.

It's amazing what people become passionate about. In what I believe to be an ever increasing passionless society, there is nothing I enjoy more than learning what is most important and excites others.

umm, could some of you check back over the weekend for some of my follow-up queries as I post. I don't think I can address everything tonight. Then, I think we'll consider this post dead...

thanks again

mx
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Last edited by mx_599; 11-13-2009 at 08:54 PM.
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Old 11-14-2009, 12:15 AM   #39
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I would rather my clients ask me the questions they're worried about than cancel their policy later and tell everyone I didn't explain it well enough. You're asking because somewhere along the line there was doubt in your mind and you needed answers.
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Old 11-14-2009, 05:24 PM   #40
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Reputable? Whole Life with Northwestern Mutual... Re: Reputable? Whole Life with Northwestern Mutual...
Originally Posted by mx_599 View Post
You guys have all been great! Wow, I need some time to digest this info.

My agent is going to hate me now. Wouldn't you guys be annoyed with a client who starts throwing out all these questions/points from the collaborative efforts of the best minds in the country on insurance??? Especially after you thought it was a done deal? I have paid nothing yet. I guess I have not really officially signed anything yet either. This is going to be a tough decision...

I am new here, but certainly not new to forums. I think one of the best resources on the net are forums. I have no idea why I didn't post here prior to meeting this agent, oh well. You generally get expert advice on these forums. You take things with a grain of salt, sure...but you can tell when people know their stuff. The best I can offer you guys is some mountain bike or cycling advice on those forums! hahaha I'm such a loser.

It's amazing what people become passionate about. In what I believe to be an ever increasing passionless society, there is nothing I enjoy more than learning what is most important and excites others.

umm, could some of you check back over the weekend for some of my follow-up queries as I post. I don't think I can address everything tonight. Then, I think we'll consider this post dead...

thanks again

mx

To be honest no, I wouldn't hate a client who asks lots of very detailed questions--perhaps I like to show off what I know a tad too much and don't get enough opportunities b/c a lot of people unfortunately think it's all way too complicated to understand .

It's your money and you should question the strategy. I like the guidance he's given you, and even if you ended up with a Northwestern policy I think you've done much better than a lot of people might. If your agents can't handle some detailed questions and your desire to practice stewardship over your money, then maybe he/she isn't the right agent.

Asking questions can lead to a better understanding, and that's vital. You're going to be making these decisions again sometime down the road. It's good to develop a relationship with your agent. The real test will be the next meeting when you show up ready to test his/her conviction in the recommendation.
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