Whole Life vs. Universal Life

[Reuben]

Re: Whole Life -versus- Universal Life

He also wants a $100k - 20 year Term to go along with it. He also wants ADB and WOP.

Is term really the best way to go? Given the nature of the beast he'll be paying a ton of $$ back at the end of a twenty year policy. A Whole life policy with a guarenteed death benefit, fixed premium rate for the durration, as well as some other bells and whistles would make more sense in the long term.

Term has it's uses, I use a convertable term policy for some of my clients, it's an easy enterance for their budgets, the plan being to convert over to perminant insurance 12/24 months down the road. This is used mainly for clients who have $$ problems at the moment. It's not meant to be a long term solution.

Term for business continuation finances is another way to go.

But 20 year term on its own.....

 

[Dave020]

Some of the best products to fit these situations are at the big mutuals and stocks (former mutuals).

They have perm plans that come in a mix, in some cases you can select the mix, of term and perm that self-converts over time (with NML using dividends).

So you'd end up like this:

20-year term....................$42.00 month
WL.................................$275.00 month
Blended Product................$102.00 month

You could cover the entire DB need with the blended, say 20% perm 80% term and over a period of years the policy would not only accrue CSV, but would also automatically convert the term portion over to perm.

At any time you could also take a paid-up reduced on the perm portion.

I wish access to these types of WL policies were available outside of the captive contracts.

 

[Reuben]

Re: Whole Life -versus- Universal Life

Could you name some? I'd love to expand my knowledge base, and I love to read.

Besides GreenSky, anyone else have some recommended reading?

Are you licenced?

If so, look at the text.

If not, AD Banker has a great Life/Accident/Health text that is rather an excellent tool for you to use.

I still would have reservations about putting a 60 year old on a term policy, WL would be a better option, albeit there would be a higher premium given the age, than a term which will not have any sort of financial return for either the client or his/her family.

What happens if the client lives past age 80?

At least with a WL product there's both the cash back, some policies will have a return of premium rider on it, as well as the death benefit.

 

[xrac]

Here is one of the advantages of participating whole life. This is latest dividend announcement from Mass Mutual:

As a mutual company, we’re owned by our policyholders, and our clients’ needs have always come first. That’s why we remain true to our long-term business approach. And it’s a philosophy that has allowed us to consistently pay dividends since the 1860s. For 2009, we have approved a $1.35 billion dividend payout to eligible participating policyholders reflecting a 7.60% dividend interest rate for new, eligible participating life insurance policies.2

Combined with financial strength ratings that continue to be among the highest in the industry3 and $8.5 billion in surplus4 forunforeseenevents, the 2009 dividend payout is another sign of our stability in unstable times. And it is a reminder to our many participating policyholders that owning whole life from MassMutual as part of their financial plan is a good decision.

 

[padthaiforlunch]

Which is why one of my first contracts was with Mass Mutual. Took a little calling around, but as an indy, they are a great resource.

Here is one of the advantages of participating whole life. This is latest dividend announcement from Mass Mutual:

As a mutual company, we’re owned by our policyholders, and our clients’ needs have always come first. That’s why we remain true to our long-term business approach. And it’s a philosophy that has allowed us to consistently pay dividends since the 1860s. For 2009, we have approved a $1.35 billion dividend payout to eligible participating policyholders reflecting a 7.60% dividend interest rate for new, eligible participating life insurance policies.2

Combined with financial strength ratings that continue to be among the highest in the industry3 and $8.5 billion in surplus4 forunforeseenevents, the 2009 dividend payout is another sign of our stability in unstable times. And it is a reminder to our many participating policyholders that owning whole life from MassMutual as part of their financial plan is a good decision.

 

[xrac]

Here is another example of the advantages of participating whole life. What investment in the past year yielded over 7% tax free? This is latest dividend announcement from Guardian:

GUARDIAN ANNOUNCES $723 MILLION DIVIDEND
TO POLICYHOLDERS IN 2009


NEW YORK, November 13, 2008 — The Guardian Life Insurance Company of America (Guardian) today announced that its Board of Directors has approved payment of $723 million in dividends to the company’s individual life policyholders in 2009. The 2009 payout, which is $60 million more than Guardian’s 2008 dividend allocation, is the largest-ever distribution to the company’s participating policyholders and reflects a dividend interest rate of 7.30%.

“Guardian is pleased to reward our participating policyholders with this record dividend payout,” said Dennis J. Manning, Guardian’s President and Chief Executive Officer. “Our ability to pay record dividends in this period of economic volatility is quite a significant accomplishment – one that confirms Guardian’s firm commitment to policyholders and validates the sound business fundamentals we follow in managing the company. These sound fundamentals translated into improved mortality experience and strong investment performance, two factors that contributed to our ability to pay a record dividend at this time.”

 

[Dave020]

Anyone know the 2009 NML dividend scale? If Mass is paying 7.60%, I assume NML is running near 8%? They always had the highest when I was with them. Does anyone have it for NML?

 

[Franz Kafka]

Anyone know the 2009 NML dividend scale? If Mass is paying 7.60%, I assume NML is running near 8%? They always had the highest when I was with them. Does anyone have it for NML?

I think it's in mid 6s. I thought MM always paid higher (??) LOL Depends on who you work for I guess.

 

[Dave020]

I seems that every year we would get a dividend survey from all of the majors and NML would be ahead (slightly) of the other carriers (I think then everyone was running 8.6 area and NML 8.8). I can't imagine NML would be lower than mass on par whole life dividend.

 

[moonlightandmargaritas]

Re: Whole Life -versus- Universal Life

held at interest(those gains might be taxable...it's been awhile)

Yes, correct you are.

Dividends are non-taxable because they technically are a return of premium.

If held at interest, the interest is taxable.