Insurance Agent Forum

[HealthGuy]

My first post on the forum: Life Insurance question: I recently learned that supposedly Northwestern Mutual Life offers a Waiver of Premium if an insured is disabled that offers (after the elimination period, typically 6 months) a completely paid up whole life policy (with full cash value the same face amount as the term and paid up - no more premiums required). Supposedly very few companies offer such a generous waiver of premium for disability that literally convert like this. So say an insured has 1 million of term, and they become disabled, supposedly the insured then can qualify (after an elimination period) for a fully paid up whole life policy at no further cost ever. Question then: If someone owns a policy like this - with a substantial face amount of term , why is a separate disablity insurance policy needed or even critical illness coverage? If someone is likely to become disabled and potentially receive a great amount in paid up whole life, why pay for an extra disability (stand alone) policy? I am in no way affiliated with Northwestern, I just was curious because I had never heard of this, and wanted another perspective.

[somarco]

Are you sure it is a "paid up" policy or just that conversion is allowed and premiums are waived on the new WL policy? There are a FEW term carriers that do something similar. Can't tell you who off the top of my head.

Just because premiums are waived, disabled folks still have other expenses. Hence the need for DI, CI, LTCi . . .

[LGilmore]

You are confusing ongoing expenses with a life insurance policy. Take a second and jot down your expenses and see if a new policy's cash values will take care of them. It's a bit different 30 years down the road.

The waivers take care of the premium expense, not your electric, car payments or mortgage. So wouldn't the need for disability insurance still be there?

[Delta76]

I believe Dave & JRoot are both ex-NML guys, hopefully they can shed some light for you on whether or not the product actually works that way. I would be very skeptical that it does.

[somarco]

Seems this same question was posted in another thread and addressed by Dave Fluker.

[psrayburn]

What the waiver of premium provision says is that you can convert your term to any Whole Life policy and still have the premiums wiaved on that WL policy. Its not a paid up policy, just the premiums paid on the converted policy. And by the way conversion IS Guaranteed. This is a great benefit. I am no longer affiliated with NML however I would be interested to find out of any others offered this kind of benefit for their term policys.

Thanks

Scott

[somarco]

Bill3173 and Blue Marlin seem to write a fair amount of life. I would think they might know.

Seems like WCL offers it, but can't say for sure. I asked my life IMO a few months back and got a response but can't find it now.

[David C]

I think Ohio National will do that.

[greenpatrol]

NWML does do that, so does NYL. Not sure about anyone else.

[MutualNewGuy]

I work for mass, same exact rider, don't get confused it's not "paid up", they pay your premiums as long as your disabled, so if someone gets disabled and they convert there term better be sure their gonna be able to make the premiums if its likely they become healthy again. Not a substitute for DI.

[SM3434]

I previously worked for NWMF and the cost of the rider is probably the cheapest I've seen for this type WOP. Def must be done with caution, I've seen guys convert policies with the WOP, and like we all know, disabilities dont always last a lifetime, therefore, the premium is now due if it was converted from term to perm. Penn mutual offers a similar rider but its much more expansive.
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Expensive***

[CFP83]

Originally Posted by SM3434

I previously worked for NWMF and the cost of the rider is probably the cheapest I've seen for this type WOP. Def must be done with caution, I've seen guys convert policies with the WOP, and like we all know, disabilities dont always last a lifetime, therefore, the premium is now due if it was converted from term to perm. Penn mutual offers a similar rider but its much more expansive.
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Expensive***

Yeah, Northwestern's waiver is the cheapest of all the companies who offer something like this that I am familiar with....Mass, NYL, Penn Mutual. From what I've seen though, Penn Mutual's is the most likely to actually work. Their waiver kicks in after four months, not the standard six. Also, Penn's waiver is an "own occ" waiver. So even if your client takes another job that they are able to do even though they can't perform their primary occupation then the premiums are still paid for by the company. Northwestern's waiver kicks in after six months and is not an own occ waiver.

[Death Cab For Tootie]

Mass Mutual's waiver is 2 years own occ for term policies, 5 years for WL.