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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.
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