Cash Value Policy for Grandchild

[marc82much]

I am interested in this. My granddaughter is 2. For a good plan (maybe with dividends) is there a company that might be worthy of a look. Of course, if I could get appointed and sell it myself, that is a bonus. I am appointed with Midland National, do they have anything that would work well?

 

[f55c6]

It has been suggested I look at a mutual company. I'm reviewing illustrations from New York Life and Mass Mutual.

 

[scagnt83]

I am interested in this. My granddaughter is 2. For a good plan (maybe with dividends) is there a company that might be worthy of a look. Of course, if I could get appointed and sell it myself, that is a bonus. I am appointed with Midland National, do they have anything that would work well?

Midland will write a child on their IUL. It is a strong product.

Penn is a good IUL and WL to look at.

 

[scagnt83]

It has been suggested I look at a mutual company. I'm reviewing illustrations from New York Life and Mass Mutual.

Penn Mutual and Mass are the best WL contracts out there right now. Guardian being a close 3rd. jmo

 

[DHK]

I believe MassMutual has one of the best GIO riders available as you can increase the face amount of the policy at 6 different times (6 different ages) each at about $100k (last I remember?).

 

[scagnt83]

I believe MassMutual has one of the best GIO riders available as you can increase the face amount of the policy at 6 different times (6 different ages) each at about $100k (last I remember?).

Guardian has 2 GIO Riders, normal and enhanced.

Enhanced is better than Mass for children. It is age based.

Insureds under age 24, have 8 age based dates they can purchase more coverage.
There are also the normal "life events" such as marriage/first home/child/etc.


I think Penn Mutual offers 6 opportunities as well. I cant remember for sure. Maybe it was only 4 or 5 with them.

 

[f55c6]

Hello, I'm a consumer looking to buy a whole life $100,000 base policy for my 6 year old grandson. I have two 10 pay $150 a month premium illustrations ($18,000) from both Mass and NYL. NYL base of $100,000 with term rider (DOT term rider $65,000) which drops off after year 7.

Mass Mutual $50,000 Base Policy and a (LISR term rider $100,000). Both riders added to prevent a MEC.

The Mass Life Insurance Supplemental Rider (LISR) stays attached and it's projected crossover point is year 9, at which time I'm being told it becomes a permanently attached paid up DB. I was told if the policy does not perform as illustrated (a non guarantee) I would have to continue to pay for it until its crossover point. Additionally, NYL has PUA rider for around $173 a year. Neither illustration includes a GIO rider.

I have a question regarding Guaranteed, Mid Point assumptions and Current dividend assumptions. I've been using only the guaranteed amounts to judge the policies. It's important for me to make the correct decision because I will eventually be purchasing two additional policies for my other grandsons.

Many of the above posts mention Mass and other companies as preferred for GIO. My question is about the NYL vs. Mass expenses when it comes to cash values.

The guaranteed column illustrates the Mass policy out performing the NYL policy at year 10. The Mass policy's $18,000 premium with 150,000 DB in year 10 guarantees a CSV of $15,739 (-$2261). The NYL 18,000 premium with $117,962 DB has a CSV of only $12,115 (-$5895). That's a whopping $3634 difference in favor of Mass Mutual.

Using the Guaranteed values, the Mass Mutual policy outperforms the NYL practically every year. Using the mid point or the non-guaranteed columns, the NYL out performs the Mass product 20 years out. Should I rely strictly on the guaranteed values when making my decision, or can I consider the other estimates in the illustrations?

When I look at the non guaranteed columns the NYL illustrates much better at year 30 (CSV $53,357/ DB $265,000 vs. Mass CSV 43,522/ DB$196,780. If my grandson would just let the policy sit and use it to supplement his retirement income at age 70, the NYL out performs Mass by 60,000 in CSV and by 135,000 more in DB in the non guaranteed column.

Are there any unbiased professional opinions as to which values to consider when making a final decision?

 

[f55c6]

I just realized both policies do not have a 100,000 base. The Mass Policy has a base of 50,000 with a 100,000 LISR and the NYL's base is 100,000 with a 65,000 DOT.

Is that the difference in the guaranteed CSV? The larger rider is cheaper in the earlier years to allow for better cash accumulation? If so, I was told the LISR projects to become permanent DB at year 9 or the crossover point. Could be year 9 or could be year 13? Unknown? It's very confusing trying to understand the bang for the buck. I'm hoping he keeps it for decades to supplement his retirement when I'm long gone, but once it's turned over when he's 25 or 30 who knows what he will do.

 

[DHK]

It's been a while since I was with MassMutual, but the LISR rider is using dividends to help pay for the term rider. LISR is a term rider that is paid for by dividend performance. This is NOT accumulating more cash values, but securing more death benefit protection for a lower premium than if it was all a whole life policy.

http://massmutual.weebly.com/uploads/1/4/0/6/1406137/whole_life_rider_guide_li1712.pdf

Notice page 10 of the link above:
What is it?
The Life Insurance Supplement Rider (LISR) is ideal for those looking to maximize the death benefit purchased with their premium dollars and who don’t require the supplemental death benefit to be guaranteed. (Meaning that it's term or temporary coverage.)

Why is it important?
With LISR, you can select your coverage to pay the premium you choose, in effect swapping guarantees for greater premium flexibility and lower cost. LISR accomplishes this by blending lower cost term insurance with whole life insurance.

Page 11:
How does it work?
You pick a target death benefit amount, which is paid with out-of-pocket premiums and non-guaranteed dividends. Initially, your policy is a combination of permanent and term insurance. Each year, as the base policy earns dividends and you make LISR premium payments, the permanent insurance within LISR builds and its term insurance portion reduces until, at a future point, the LISR becomes all permanent insurance. The timing of when the policy becomes all permanent insurance is a function of the amount of non-guaranteed dividends paid each year. An 8 percent service charge will be deducted from each LISR purchase payment made.


This is designed to secure the death benefit, NOT for cash value accumulation. I would NOT design a policy this way if your primary concern is cash value accumulation.

If I were with MassMutual, I would choose ONLY a base whole life policy, with additional ALIR (this is the paid-up additions rider) along with the GIO rider (also explained in the link above). If you desire more death benefit coverage, I'd look at the RTR rider instead of LISR that uses dividend performance to pay for your term coverage instead of growing cash values.

EDIT: After reviewing the illustrations, the above is wrong. See later post.

 

[f55c6]

Thank you very much. I was very concerned about the LISR after reading the illustration.