NWML Whole Life Policy - Want to Improve Performance

[googlybear]

I currently own a whole life policy with a $382K death benefit and am paying $6k premium per year and am finishing year two with $4,420 in csv. Im hoping to improve the CSV performance by overfunding the policy but i want this overfunding to be flexible since im not sure i can do it every year. Does a standard NWM policy allow flexible overfunding with paid up additions? My agent's response is:

"whenever this is done, it is a change to the policy. One cannot just send in additional money and have it added to the policy. With additional money comes additional potential risk to the company and therefore sometimes additional underwriting; therefore, what we typically do is run a Policy Change Estimate that allows us to see what, if any, underwriting will be necessary."

I do not want to buy additional insurance but want the performance of my policy to improve. Thanks in advance for any insight.

GB

 

[BNTRS]

Your agent is partially correct. The over-funding mechanism for whole life insurance is through a rider known as the paid-up additions rider, which does create more death benefit. Because of this, insurance companies have restrictions on the paid-up additions rider.

Now, typically this can be added and as long as you plan to remain within the parameters, no additional underwriting would be necessary.

The other issue that the agent didn't really mention is the potential to turn the contract from a life insurance contract into the a Modified Endowment Contract. This is rather easily avoided.

Since this is NML, there's not a lot of hands on help I can offer. But you might want to seek out a forum member named Chuckles, who is an NML agent and could potentially assist you further on this.

 

[Chuckles21]

Thanks BNTRS,

Your agent is correct in what he told you as far as needing to run a policy change estimate. The biggest question i have is what type of whole life policy do you have? Is it a 65L, 90L, ACL (with or without term mixed in)? The answer to this question is going to give me the greatest insight as to how easy it would be to overfund this contract.

There are ways to create a contract with the ability to have flexible overfunding but it has to be set up pretty specifically.

 

[googlybear]

I have a 90 Life policy. I have two term policies with it but did not think they were connected. How would I know by looking at the policies?

 

[Chuckles21]

I have a 90 Life policy. I have two term policies with it but did not think they were connected. How would I know by looking at the policies?

90L doesn't have term mixed in. Only an ACL or ECL contract would have a mixture of term with them. Don't quote me on this but I think you can turn the 90L contract into an ACL and mix one of your term contracts into it as TIB (term inside the contract). This would give you the ability to overfund. As far as how much you could overfund and how easy it would be to make this change, I would talk to your agent.

If health is not an issue it might just be easier to wright a new ACL contract and take the cash value from your current 90L and move it into the new contract. This way you can set it up with the mindset to overfund from the beginning.