Too much insurance, or not enough(?)

[Lloyds of Lubbock]

I would think twice about surrendering the policies.
Permanent life insurance is not just about the cash value.
How does it interact witb your other assets especially qualified ones.
Would your spouse let you take a straight life annuity to maximize your payouts, not without permanent life insurance.
Also that term 80 isn't that a yrt? Those rates can escalate.
Having permanent can only enhance your retirement.
Pay those NML policies till your 65 or 70 and they will distribute nicely.

 

[DaubsNU1]

I appreciate all the advice here, even with limited information from me. I'm planning to meet with financial planner soon to discuss entire portfolio / finances / plans going forward.

Blended family, I have two daughters in college. One has scholarships and paying her own way while she lives with her mother/stepdad. My youngest is working her way though college and I want to be able to help her out with tuition (about $21k over next three years).

Wife has two boys in high school. Her and her Ex have college savings set up for them both. Should be good to go there.

Between wife and I we earn around $160k annually. We each contribute to our own retirement accounts...I'm on track to retire @ 67, her close behind. We are making additional payments on mortgage to shorten the 30 year down to 20 years. No credit card debt, no car payments, just mortgage. Budgeted out so we are putting $1k in savings every month.

I'm leaning towards cashing out and using the $$ as follows:
- $10k in savings to put towards daughters weddings, when that time comes...
- $21k towards daughters college tuition (she covers room & board, books fees...I really believe students should have "skin-in-the-game" / motivation)
- $5k towards bathroom re-model (happy wife = happy life)
- $24k in savings, added to the $80 already in there
- Will take the $4,200 per year and contribute to my 401k

 

[Lloyds of Lubbock]

Good luck!

 

[DHK]

My best recommendation: meet with a professional agent / advisor in your state for a complete review.

https://davidkinderfinancial.wixsit...6/The-Value-of-an-Agent-Advisor-or-Consultant

Contact the Northwestern Mutual office... or you can "find an advisor" who is a member of NAIFA.

Find an Advisor – Advisors You Can Trust

 

[DaubsNU1]

Thanks DHK. Yes, my plan is to visit with a financial advisor. I have three recommendations from family and a very close friend.

Of course I will not make any decisions without first consulting a professional. And discussing with my wife.

 

[Allen Trent]

51 year old male, non-smoker, good health. Got set up with multiple policies through Northwestern Mutual years ago. Also have employer provided coverage. Haven't really paid attention to the policies...just kept paying premiums. Only debt wife and I have is $344k on 30 year mortgage taken out last July. We are making additional payments with goal of having it paid off in 20 years.

Thoughts and suggestions on what I have currently...too much, not enough? Good policies? Cash out?

N'Western Mutual
- Term 80 = $730k death benefit, $1,588 annual premium, $28.20 last dividend
- Adjustable Complife = $130k death benefit, $2,059 annual premium, $861.00 last dividend, $26k net cash value
- Variable Complife = $149k death benefit, $2,274 annual premium, $371.00 last dividend, $34k net cash value

Employer
- Employer Paid Basic Life = $50k death benefit
- Supplemental Life Employee = $10k death benefit, costs $2.30 per month

I would look closely at the NWM term 80. You likely totally misunderstand it. NWM agents tend to sell this product because their level term policies like 20 or 30 year term are not that competitive. But term 80 merely means you can keep renewing it until age 80, but the price will escalate heavily. I believe the rate is only level for the 1st 5 years and then escalates each and every year. This will be way more expensive than 20 or 30 year level term. The excuse by the agent is that you will convert all of this to Whole life over time, so why pay for 20 or 30 year level term. The problem is that most people dont convert all or even most of it to Whole Life because the annual premiums will be tens of thousands of dollars per year

Pull that policy out & look at ledger for both the projected & guaranteed worst case premiums on the term to 80. I believe you will see what I am talking about. The premium will jump often & heavily.

On your Adjustable Comp life, rather than surrendering those policies, you could either change the dividend to pay part of the premium and pay the balance out of pocket. This would save you premium dollars to go toward real level term insurance or retirement savings or paying down debt faster. Or, you could elect a reduced paid up policy on that Adjustable Comp life. Your policy would be completely paid up for a lower face amount & would continue to grow as dividends buy more coverage. That would save you your entire premium to buy more real level term, save for retirement or pay down debt. These 2 options would allow you to keep the policy but lower or eliminate the premium.

 

[Allen Trent]

I'm probably going to get some flak on this but I would surrender the cash value policies. That adds $60,000 to your savings immediately. Then add the $4200 per year to your savings that you no longer pay for those policies. With modest earnings on that money and the $80,000 you could have well over $250,000 stashed by the time you are 65. If you can get your house paid off early and avoid debt you can decide if you want to keep working or take SS.

Meantime, $730,000 in term to 80 is plenty. By the time you are 80, you shouldn't need life insurance, you should have enough money stashed to take care of your surviving spouse should you go first. And maybe some term to 80 on her.

Problem is the term to 80 will only have level premiums from age 51 to 56 for this client & then the price will escalate annually from age 57 to 80. It will get ridiculously expensive in just a few short years. Really needs to look at getting a 10, 15 or 20 year level term to replace this policy ASAP

 

[Allen Trent]

I appreciate all the advice here, even with limited information from me. I'm planning to meet with financial planner soon to discuss entire portfolio / finances / plans going forward.

Blended family, I have two daughters in college. One has scholarships and paying her own way while she lives with her mother/stepdad. My youngest is working her way though college and I want to be able to help her out with tuition (about $21k over next three years).

Wife has two boys in high school. Her and her Ex have college savings set up for them both. Should be good to go there.

Between wife and I we earn around $160k annually. We each contribute to our own retirement accounts...I'm on track to retire @ 67, her close behind. We are making additional payments on mortgage to shorten the 30 year down to 20 years. No credit card debt, no car payments, just mortgage. Budgeted out so we are putting $1k in savings every month.

I'm leaning towards cashing out and using the $$ as follows:
- $10k in savings to put towards daughters weddings, when that time comes...
- $21k towards daughters college tuition (she covers room & board, books fees...I really believe students should have "skin-in-the-game" / motivation)
- $5k towards bathroom re-model (happy wife = happy life)
- $24k in savings, added to the $80 already in there
- Will take the $4,200 per year and contribute to my 401k

If you go this route, you need to take the 4200 savings along with cancelling the term 80 to buy real 10,15 or 20 year term. Instead of cashing in those policies & putting the money in your bank saving making no interest, get projections on both of those cash value policies to be reduced paid up coverage. You will have guaranteed paid up coverage forever & if you ever need the cash out later, you can cash it on in those later years rather than having the same cash sitting in the bank doing nothing for you. Might has well keep making 3-4% interest on the cash in the policies along with getting the tax free death benefit protection, but eliminating the premium commitment if that is your main goal