Northwestern Mutual = Bernie Madoff?
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[quote=anonymous]Berkshire Bull, at the same dollar figure, the only time that UL is going to be better than WL is at older ages using a GUL.
There are a couple of problems with UL. Primarily, it is because UL is really annually renewable term insurance combined with a side fund. ART is not designed to be kept long term. The increasing cost of insurance makes it very hard to not ultimately have a UL policy lapse. The other issue is that insurance costs must always be priced high to protect the insurance company. With a UL, the policyholder doesn't benefit when the mortality is less than assumed. You asked about what happens with a term/WL policy when the term runs out. Because the WL policy grows, it will ultimately provide a greater death benefit than the UL.[/quote]You do realize that 95% of the people you're selling whole life to will not carry the policy through to their death, right?
What will happen to the person who wanted a permanent death benefit and instead of buying permanent bought part perm and part term? The term will drop in 20 or 30 years and the whole life will never match the death benefit of the GUL unless you live longer than the actuary tables or interest rates rise dramatically and for someone looking for LI for a permanent death benefit that's a gamble with WL that most people won't win.
“You do realize that 95% of the people you’re selling whole life to will not carry the policy through to their death, right?”
I don't realize that at all. I believe that I've had more death claims than people drop policies. Most of my lapses were my fault from earlier in my career. I sold too much premium. I can't remember the last time that I had someond drop a whole life policy. The key is that it needs to be sold at a premium that is easy to handle."What will happen to the person who wanted a permanent death benefit and instead of buying permanent bought part perm and part term? The term will drop in 20 or 30 years and the whole life will never match the death benefit of the GUL unless you live longer than the actuary tables or interest rates rise dramatically and for someone looking for LI for a permanent death benefit that's a gamble with WL that most people won't win." It's obvious that you haven't been selling long and your experience comes from looking at illustrations and not seeing what happens with real people. Unexpected things happen in life. If 20 years from now, the person runs into difficulties, they can't not pay out of pocket on their GUL policy and keep the guarantees. They will be able to do it with a WL policy. GUL takes away all flexibility. Let's assume that someone does pay their premium every year. No matter how we slice it, for the same premium, the products are going to be close to equal or whole life/term will come out way ahead. To make it as apples to apples as possible, I'll use a WL/term combo where the WL dividends convert the term portion to WL. Let me give you some examples using a 30 year old client. 1) Client dies immediately after paying first premium: The products are equal. 2) Client dies at a very old age: WL is much better. 3) Client dies anywhere between year 1 and whatever year all of the term gets converted: The products are equal. 4) Client is 70 and decides he doesn't want his policy any longer and cashes out: WL is much better. 5) Client is 70 and wants insurance for the rest of his life, but doesn't want to continue paying for insurance: WL is much much better. 6) Client is 45 and has run into some temporary cash flow issues: WL is much better. GUL is only a superior solution if the client is already old.
Agree with anonymous. Apples to oranges to bananas. (WL to UL to equity)
Dividend rate IS NOT a rate of return. When I sell a WL policy I actually run the rate of return page. Usually for a 25-50yo, the rate of return is about 1.5-2.5% lower than the dividend illustrated (from policy years 20-30+ on). The rate of return is non-existant or low until this point because the policy fees from the first few years cause low cash value.
ALSO if you are an agent, download FULL DISCLOSURE software to run example policies from all the major companies (that are willing to participate lol). You can see 10/20/30 year comparisons of what actual policies have done. The fun thing to check is the companies that have a higher divended but running identical premiums through different companies they end up with a lower rate of return (Mass Mutual has a higher dividend then NYL or NM but lower ROR).
No product is the only/best answer. I sell all of the above - my own personal money goes into everything - 401k, pension, ROTH, 529, Term insurance, and whole life.
UL is misused too much - should be for older clients or business cases primarily. I am so sick of VUL being sold for college savings. HELLO - 529? I just met someone putting $750/mo into a VUL for college - the agent told them they could access it ALL tax free. UMM MAYBE IF YOU DIED. So sad. gives insurance a bad name. There are no bad products - just dumb/greedy agents looking to make $$$. Client thinks he is in the greatest thing since sliced bread. I am going to end up making 1/10 of the commission the first agent did when I recommend term/529. He doesn’t have a personal long term insurance need and he has 6 kids - trying to take money systematically out of a VUL over 20 years while the insurance expenses go up = crazy.
What I want to know is why are all these top advisors that represent Northwestern Mutual are now jumping ship. A large Saint Louis office and a Miami office have now left Northwestern for greater opportunities for their clients
What I want to know is why are all these top advisors that represent Northwestern Mutual are now jumping ship. A large Saint Louis office and a Miami office have now left Northwestern for greater opportunities for their clients