How Does NWM Additional Purchase Benefit Work?

[Pmchapman]

I have a Northwestern Mutual adjustable complife policy from 2001, now with a $365,000 death benefit (originally $320,000). My wife are planning on having a 2nd child in the next two years, I was wondering what the benefit of using the $100,000 additional purchase are, besides increasing the death benefit? How much more would the premium be, how would it effect cash value and paid up insurance? I am almost 36 1/2 years old. Thanks,

Peter

 

[Mehler91]

I would advise you to talk with your agent. They should be able to answer all of your questions.

 

[Pmchapman]

I will do that but was hoping to hear people's opinion on doing this or not. Thanks!

 

[Mehler91]

To get the exact costs the agent will need to be involved. I would love to help you out but the details provided aren't enough to properly help you.

 

[BNTRS]

If you exercise the benefit you are going to buy another whole life policy for $100,000. The benefit to using this option to purchase the policy will be guaranteed issue (no medical underwriting, you'll just need to be able to prove that you would financially qualify for the additional death benefit) and there will be no policy fee attached to this policy.

If you want/need more death benefit it's worth looking at.

Cost is going to be relative to what you've been paying. You're older, so required premium is higher per 1000 of death benefit vs. what it was when you first purchased the policy, but it's not extraordinarily higher.

There is no effect on paid-up additions per se, by which I mean there is no effect on the paid-up additions that would have been purchased under the original policy. The new policy will earn dividends and can purchase paid up additions as well, so more money going to life insurance means there will ultimately be more paid-up additions, but that's not a function of the rider's being exercised and simply your placing more money into life insurance. The same is true of cash values. The rider itself isn't going to effect it, but the fact that you would be giving NML more money means there will ultimately be more money in cash surrender values. Whether or not that rise in cash values is worthwhile relative to the money that you are giving NML is another question entirely, and goes beyond the scope of this conversation based on what you've disclosed so far.

 

[Pmchapman]

Thank you very much for your response. My current premium is $298.88 a month and I was hoping the increase in premium would be under an extra $100 a month, but it sounds like it would be more than that. I am glad there is no extra policy fee (I have already been paying for that), well it be generating cash value like my current policy or will it take time to generate it like my current policy used to. Thanks!

Peter