Author Topic: Guaranteed Choice Whole Life, "770 Account"  (Read 2410 times)

Mr.Matt

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Guaranteed Choice Whole Life, "770 Account"
« on: December 01, 2014, 07:56:47 PM »
Hello All,

Cool site BTW. Glad I ran across it...again! I am starting to take my money savings a little more serious. I have not been neglecting my retirement, but probably not giving proper attention. I am 39 yrs. old and recently married. I have been racking my brain the past 3 weeks trying to determine if a whole life insurance policy makes sense for me. I am planning on having kids so keep that in mind.

Here's my dilemma. I have been talking with Penn Mutual re a Whole Life Insurance policy. I did find this forum post, http://forum.mrmoneymustache.com/ask-a-mustachian/life-insurance-question/msg13752/#msg13752, but since it hadn't had any recent activity, I'd like to stir up the conversation topic once again. :) I would like to make mention that the Whole Life Policy I am specifically looking at is sometimes referred to as a"770 Account". I am told that a "770 Account" is different than a traditional Whole Life policy based on the way it is structured. The documents I have received point out the difference between these types of accounts by saying, "This 770 account is not more than Permanent Life Insurance with a twist – it maximizes the Life Benefit and not the Death Benefit." That is sort of my first question. Does anyone know more about the structure of a life insurance policy when it is setup as a "770 Account"? BTW, Penn Mutual refers to this type of Whole Life as "Guaranteed Choice Whole Life".

Here is where we stand financially. I make ~100k/yr and my wife is making ~70k/yr. I have a pension through my employer. I am required to contribute 8.5% and my employer matches that contribution 100% with a guaranteed 2.1% return. I am also maxing out my Roth IRA. My wife has a 401k through her employer, contributing the max amount. She is not participating in any other investments. We have a mortgage and are making slightly higher mortgage payments than the minimum requirements. No other debt. We do not plan on staying where we are currently living if we have kids. We estimate that we could net around $600-$800/month if we rented it out. Our current net worth including savings, investments and assets is ~385k.

At this point we are banking $1,100 per month in a standard savings account. I am intrigued with the Whole Life Insurance policy because I am skeptical about the stock market and all of our current investments are tied to the stock market. I understand that Penn Mutual's return is not directly tied to the stock market which I do like (if true). I feel like it could be a better place for our cash. I am not looking at this as a get rich investment! I dont think it is all

Is this concept a good investment vehicle for us, or are there better options? If not, what are the reasons this is not a good investment? A lot of posts out there call this type of investment a scam. However, the "scammers" never really explain why, which I find interesting. They could be right. Penn Mutual is a legit company and has been around for over 100 years. There are other companies who offer this type of Whole Life as well.

Thanks for reading!

"I only came here to do two things, kick some ass (aka, try to understand life insurance) and drink some beer…Looks like we’re almost outta beer.”

regulator

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Re: Guaranteed Choice Whole Life, "770 Account"
« Reply #1 on: December 01, 2014, 08:08:48 PM »
Run.  Whole life is always a poor investment as it has extremely high internal costs compared to competing investments (CDs, bond fund, etc.).

MDM

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Re: Guaranteed Choice Whole Life, "770 Account"
« Reply #2 on: December 01, 2014, 08:21:07 PM »
Run.  Whole life is always a poor investment as it has extremely high internal costs compared to competing investments (CDs, bond fund, etc.).

+1

If that's not enough, start with http://www.bogleheads.org/forum/viewtopic.php?f=1&t=130913 and follow the links therein.

Best wishes for whatever you do instead of the "770 account."

Davids

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Re: Guaranteed Choice Whole Life, "770 Account"
« Reply #3 on: December 01, 2014, 08:37:20 PM »
Whole Life Insurance is a waste, do not bother with it. As the saying goes "Buy term and invest the difference"

Mr.Matt

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Re: Guaranteed Choice Whole Life, "770 Account"
« Reply #4 on: December 01, 2014, 08:38:06 PM »
Thanks for the quick replies and links!