Author Topic: So my Mother-in-Law sold us a Northwestern Mutual Whole Life policy. Now what?  (Read 42010 times)

brewer12345

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Thanks for posting this and I would like to encourage others to chime in with their experiences.

Ok, I'll share another one. Part of rockelbock's story sounded like my story - the refer a friend pitch part.

So I met with a NW Mutual agent who was a friend/acquaintance of mine one day. After he realized I wasn't buying a single thing from him he proceeded to ask me to just go ahead and forward him the contact info of everyone of my co-workers so he could solicit them. And he was dead serious. I told him "um, yeah, that is not ever going to happen so don't ask again". I was dumbfounded. Who does that shit?

Insurance agents.  They are trained to do exactly that.

Nords

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I'm a mustachian and a Northwestern Mutual agent.  I've never registered on the site, but I had to, to respond to your post.  Your MIL did you a favor.   If you keep the policy, (which you should for many reasons) you will thank her in 20 years.   I could go on and on with all the reasons why, but just know this... If this was the worst financial decision you ever made, you will be very well off indeed.  You will have lifetime protection for your family, guaranteed returns and tax avoidance in a very highly taxed state.   I hope you man up and talk to her about your concerns instead of a bunch of anonymous bloggers, and arrive at an informed decision based on your own very personal circumstances.

Hi Bearkat,
My wife had to explain what PM meant.   I would, but don't know how.   This is my first ever blog post in my life.   I guess your mention of NML just happened to catch my eye.
  I admit I was hesitant, and for good reason.   The first reply I get is a guy telling me to fuck off.  Oh well, PeteD, guess what?   I'm not pitching anything.   Just offering a different (and way more experienced) opinion than yours. 

Every person's situation is different.    Taxes, income, expenses, health, goals, etc.  whole life is not the product for everyone, but it's not always wrong, either.   it does make sense, sometimes.   I know, based on your description, that your MIL designed the lowest load policy possible.  And Northwestern Mutual has historically provided the highest cash value RORs in the industry.   Period.   She is not ripping you off.  Im sure she wants you and her daughter to be financially successful and self-reliant.   

I'd be glad to share more details later and offer you a "free" although biased second opinion.   But it's late on a Friday night.   I'm winding down after three fingers of delicious Costco 7 yr old bourbon.   And I'm tired of thinking about insurance.   You'll be fine either way.  And if you do happen to keep it, it would be a reasonable price to pay to keep your wife and MIL happy.    I speak from experience.
I'm impressed.  After  more than a decade on financial-independence forums, it's almost as if these guys are posting from the same script.

"Gee, I've never posted on one of these here forums before, and I don't really know anything about how to do stuff here.  I was just passing by when the Bat Insurance spotlight started shining up into the sky.  But, oh, you got a great deal on your policy!  I'll tell you all about it... just as soon as... well there might be other issues... I'll get right back to you with the details... but..."

I wish that just once an insurance agent would run a forum that answers poster questions with specific details about why the policy is such a great deal.  But I guess that none of them have the free time or the financial independence to be an objective critic of the genre.  Call me cynical, but I bet he finds the time to return to express his disappointment at our cynicism and then flounce off in a huff of professional insurance sales head-shaking.

I think insurance should be used as a means of... wait for it... insuring against... it's almost here... risk.  Investments should be a means of... growing wealth.  Mixing the two concepts is a great way to enrich financial advisors and insurance agents.

While Puck is working up a coherent post with specific details about why whole life is such an awesome deal, let me elevate the pyramid of dispute with some counterproposals from Jim Dahle over at White Coat Investor:
http://whitecoatinvestor.com/rebutting-the-arguments-for-indexed-universal-life-insurance/
http://whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance-part-5/

Gee, Jim is a military veteran and an emergency room surgeon who somehow-- against all logic-- manages to take a few minutes out of his busy day to debunk insurance marketing.  He doesn't even have the incredible depth or breadth of experience shared by insurance sales experts, but somehow he manages to stumble onto these nuggets of knowledge.  He's learned how to post to Bogleheads!  Even more impressive, he can even figure out how to write a coherent paragraph and post it on his own blog, too!

Imagine how productive he could be if he sold whole life!!!

MikeBear

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I though it was an interesting choice of a user name.

I don't want to seem like I'm just piling on, or just jaded from life (I'm age 55), but Bearkat is at a dangerous age of still trusting people without verification who SEEM to have authority. I'm sure he'll get cured of that quickly. I hope in some little way it doesn't cost him as much as it's cost others through their lives:

"PUCK" http://en.wikipedia.org/wiki/Puck_%28A_Midsummer_Night%27s_Dream%29

Quote
Puck, also known as Robin Goodfellow, is a character in William Shakespeare's play A Midsummer Night's Dream that was based on the ancient figure in English mythology, also called Puck.

Puck is a clever, mischievous elf or sprite that personifies the trickster or the wise knave.

Definition: Knave: http://www.merriam-webster.com/dictionary/knave
Quote
: a dishonest man

The first quality of many salesman?
« Last Edit: August 02, 2014, 10:08:39 PM by MikeBear »

Cpa Cat

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I wish that just once an insurance agent would run a forum that answers poster questions with specific details about why the policy is such a great deal.

I think the problem is that they can't. I doubt most insurance agents truly understand the fine print of what they are selling. The insurance companies that employ them essentially market to them as well, and do a good job of convincing them that they are selling a good product.

They can never really seem to explain why whole life never ends up adding up to quite what the brochure and marketing materials promised. Why the return that was promised always seems to fall short. Their job is to sell the policy, not to examine it 7-8 years down the road to see if it ever really turned into a good "investment".

I am 99% sure that the OP's MIL thought she was selling a good product. But she won't be able to answer questions that go beyond the sales brochure. She very likely doesn't have that information and may not understand it even if she did. This is a product that was sold to her too. Most insurance agents buy whole life for themselves, their spouses and their children.

It's like car dealership lending. I've never known a car salesman who didn't buy a car, on credit, from the dealership they work for. Most people can't sell this stuff unless they buy in first.

Nords

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I think the problem is that they can't. I doubt most insurance agents truly understand the fine print of what they are selling. The insurance companies that employ them essentially market to them as well, and do a good job of convincing them that they are selling a good product.

They can never really seem to explain why whole life never ends up adding up to quite what the brochure and marketing materials promised. Why the return that was promised always seems to fall short. Their job is to sell the policy, not to examine it 7-8 years down the road to see if it ever really turned into a good "investment".
It might be even worse than that. 

A fellow personal-finance blogger (who shall not be named) is a CFP.  He did the coursework, passed the exam, got his hours, and set up his own business.  He hypothetically could be earning his entire living today as a fee-only CFP.

However he picked up an insurance license along the way and was selling policies on the side.  (He sold very little whole life, let alone indexed annuities...)  I'm not sure who was more angry with his betrayal-- the CFP board or State Farm-- but he ended up voluntarily surrendering the CFP so that he could keep his existing insurance business and not have to build a CFP business from scratch.  Today he makes more money from his side-hustle businesses (including blogging & podcasting) so it's a moot point, yet one that left a very bad taste in his mouth.

Dodge

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They can never really seem to explain why whole life never ends up adding up to quite what the brochure and marketing materials promised. Why the return that was promised always seems to fall short. Their job is to sell the policy, not to examine it 7-8 years down the road to see if it ever really turned into a good "investment".

That's the biggest problem right there. I read a post like this on June Boglehead forums. The salesman "guaranteed" something like 7% or 9% returns, "after fees". The person posting was questioning how they could legally offer that, then not follow through with the promised results.

"But if they are guaranteeing the return, how could I go wrong? It says it right there!"

Unfortunately, they didn't read all the fine print.

sarah8001

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I just skimmed through the requisite arguing that occurs on every post longer than three replies, and didn't see this perspective offered, so here it is. Regardless of whether or not the insurance is a good deal financially, you may be getting more than money from it.
In my experience, there are two types of salespeople in the world, the kind who is looking for a quick buck, and the kind who has drunk the Kool-Aid and truly, deeply, believes in their product and cares for their customers. It is so obvious to them that their product is a great value, a wonderful product that can greatly enhance your life. They genuinely care about you, and believe that buying their product will better your life. They worry about you when you don't buy it.
When I met my fiance, he was broke, sleeping on the floor in the dining room of one bedroom apartment, behind on every bill, but paying 90$ a month for the privelege of selling legal insurance (you pay X$ per month, and if you ever need a lawyer, their rate is reduced by a percentage, based on how much you are paying). He had never made any money, but he believed in the product. He still, after reading most of MMM's site, and learning to make far better financial decisions, believes in the product. It will always be a bone of contention between us that I forced him to quit. I basically gave him an ultimatum after we'd been dating for awhile, and I got a look at his financials. As soon as you cancel that policy, your MIL may be fraught with worry, because she believes in whole life insurance. If she's that type of salesman, her first priority will be to help you rectify this mistake, because she cares about you and wants you to have this amazing insurance. You may have to say no a couple hundred times, and hurt her feelings pretty badly. Just a thought.

usmarine1975

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Insurance agents can not write a blog describing the merits with a great load of detail for one reason.  Wait for it-     compliance.    -  anything they say in print can be construed as advertisement and has to be approved by their compliance department. Most of which will not allow it.

I left the insurance company because I personally feel the commission structure puts the advisor at odds with the client.  We could spend days talking about this or that insurance agent that acts this or that way. We could do the same with contractors, police officers, CPAs, lawyers, CFP, computer programmers, politicians, etc.... 
I am capable of rational thought despite the fact we may disagree on this and maybe other issues.  The beauty of it is you don't need to buy it. Self insure. It really is a personal decision based on personal situations. I don't care if you believe me, think I am rational, or have immense hatred towards me because I once sold Insurance.  I don't drink the kool aid or I would still be there.  I am thankful that I had the ability to learn what I have about insurance, annuities, and investments.  Also thankful to have learned about our ever changing fed and state tax laws. 

I have one more class to finish my CFP training then need to take the test.  Not sure if how I will use it at this point just want to complete it. 

Good luck to all of you as you push to FI.

usmarine1975

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Quick story. First Insurance company I worked for my manager tried to get me to buy a new vehicle. His reasoning was I would look wealthy to clients and I would have a payment which would drive me to sell.  I bought a very used Vw jetta. Miss that car it was sideswiped while parked and totaled.

Cheddar Stacker

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Good luck to you as well usmarine1975. Interesting angle on the car payment motivation. Crazy world.

usmarine1975

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As soon as I got all my licenses I quit that firm and wrote a letter why, that was one of many reasons I wouldn't work under that manager. He also tried to sell Whole life as an investment to a friend of mine who called him out on it. Was quite funny. He and I discuss it to this day.  The stories I could tell.

usmarine1975

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I liked your story about the agent trying to get referrals. Right out of the classes we had to sit through. I never used that angle.  I would mention to my clients that I would appreciate referrals but in the sense that like other jobs they refer me and said person reaches out to me.

ender

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puck, just an FYI which will prove quite useful should you realize it - you are interacting with a forum of people who are highly financially literate, motivated, and actively optimizing their financial lives.

Platitudes, generalizations, sales pitch types of posts, and overall "we're just trying to help!" attitudes are not going to convince anyone here. The only way you are going to be taken credibly is to show mathematically and analytically how whole life policies are in the buyers best interest. Which as you know is going to be a nearly impossible task (and, why people are pressing you for it so strongly).

You are hardly the first insurance salesman to show up and do the exact same dance to the nearly exact same tune.

iris lily

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puck, just an FYI which will prove quite useful should you realize it - you are interacting with a forum of people who are highly financially literate, motivated, and actively optimizing their financial lives.

Platitudes, generalizations, sales pitch types of posts, and overall "we're just trying to help!" attitudes are not going to convince anyone here. The only way you are going to be taken credibly is to show mathematically and analytically how whole life policies are in the buyers best interest. Which as you know is going to be a nearly impossible task (and, why people are pressing you for it so strongly).

You are hardly the first insurance salesman to show up and do the exact same dance to the nearly exact same tune.

come now, puck will not be back.

usmarine1975

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I read the stories about the numbers and tried to address why Puck may not be able to show the numbers etc... Because of marketing.  Frankly I was surprised he even posted if his compliance department found out he could get in trouble.  But I will go a bit further as I AM NO LONGER AN AGENT that sells Life Insurance.

For me trying to compare a whole life policy to an investment account is well quite frankly silly.  I didn't buy my whole life policy as an investment and do not consider it to be such.  It is a permanent life insurance policy that will be in place when I die.  Hence the reason I purchased it.  And as such I have no reason to compare or show numbers comparing it to an investment. 

I have a retirement account and a brokerage account in which I put investment funds into.

I realize many will disagree with my purchasing a WL Policy and well that's fine you don't have to pay the premium when you do feel free to face punch me.  At the same time I appreciate all your comments as to why you don't purchase a whole life policy because it challenges me on my reasons for buying.  And as I have reviewed it and reconsidered it.  Mine will stay in force. 

dandarc

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One thing that I think rarely comes up in these discussions that I think is something to think about - most term insurance is guaranteed renewable up until age 85 or something like that.  What this means - if you get to the end of the 20 year term, you CAN keep the insurance if you want - it just goes up in cost every single year after that.  So if you get to the end and you still want to have this insurance (maybe an unfortunate diagnosis came along), you can keep it - the premium will make a pretty big jump for year 21 then increase more modestly each year after that.  I can't find any actual rate tables (I actually looked at one a very long time ago, but have lost the link), but I suspect that for a 44 year old, the cost will still be substantially less than 12k per year.

What the 20 year level term actually does is level out the cost over the 20 years - you're paying more today so that you pay less than you otherwise would at the end of the term.

bearkat

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Hey guys, OP here.

Thanks so much for all the responses. To quickly summarize:

Whole Life INSURANCE -- people buy it for a permenant death benefit. Whether many or few people actually need or want that is a personal decision (not a pure financial one, though it will definitely cost $$ to have it)

Investments -- for the purposes of retirement, kids' college etc. ... While whole life does build up a cash value, whole life doesn't fit the bill for most people's investment needs.

MMM was down yesterday, at least for me, but when I get off jury duty today, I'll post a copy of the illustration I was given when I bought the policy ... In looking at it now ... I must have really thought my MIL knew something that I didn't.

To bring it back to my last two original questions, anyone have experience with family members as insurance agents or being pushy with non-Mustachian financial advice?

Sorry for any typos, on my phone right now. If there were any specific questions for me i'll address them later.

tyd450

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In regards to pushy friends or family members who are trying to "help you out"  I always just say that I am a "DIY type of guy" when it comes to investments and I like to focus on low costs and NO COMMISSIONS. 

I really haven't ever had anyone try to argue with that.  Sure they may say that they have LOW commissions but they can't say they have NO commissions.

I get a little sassy too because I really like to say "I really appreciate you going out of your way to help me but I am a DIY type of guy when it comes to things like this and I like to focus on low costs and no commissions."

Because honestly, fuck them for trying to make money off of you while playing the family or friend card.

MooseOutFront

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Thanks for posting this and I would like to encourage others to chime in with their experiences.

Ok, I'll share another one. Part of rockelbock's story sounded like my story - the refer a friend pitch part.

So I met with a NW Mutual agent who was a friend/acquaintance of mine one day. After he realized I wasn't buying a single thing from him he proceeded to ask me to just go ahead and forward him the contact info of everyone of my co-workers so he could solicit them. And he was dead serious. I told him "um, yeah, that is not ever going to happen so don't ask again". I was dumbfounded. Who does that shit?
haha.  I used to have a longterm disability policy on my wife through NWM. At the time she made a lot more than me and I was young and thought we needed the insurance.  I had him quote me some term policies too, but they all included dividends to keep the rates low and I hate that and they were always convertible or something.  Just not what I wanted.  Anyway, he comes by at about the third meeting and he had a list of all my linkedin connections.  He pulled it out and says hey do you have phone numbers handy for x, y, z and is it OK if I drop your name?  I was like, no dude please do not call my friends and I never accepted a meeting with him again.  Cancelled that disability policy once I realized we could get by on just my income and that social security disability is good enough once you have your expenses low (thanks MMM).

I honestly feel sorry for the young guys trying to make it in the insurance and investment sales games.  The pressure is on and it's hard to be cool when everyone you ever meet is a mark.
« Last Edit: August 04, 2014, 12:39:24 PM by MooseOutFront »

dandarc

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I honestly feel sorry for the young guys trying to make it in the insurance and investment sales games.  The pressure is on and it's hard to be cool when everyone you ever meet is a mark.

This - I almost wound up becoming a NWM agent out of college, but basically the "internship" consisted of selling insurance to your family.  I didn't know nearly as much about personal finance then as I do now, but trying to sell pretty expensive policies to my family just didn't sit right with me so I just couldn't do it.  Nothing against the company at all - I actually have my long term disability through them, but this was definitely not the job for me.

AH013

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Like a few others, I briefly worked for NWM and echo most of what everyone else already said.

1)  Whole life is junk.  MIL made a hefty bit of dough off you.  NWM split was/is 90% of first year premium as a commission, split between agent (50-60%) and office (40-50%).  She took you for $10,800, and pocketed somewhere between $5,400-$6,480.
2)  Without kids or a house, you really have nothing to insure.  If you die, wife will continue working to fund her own retirement.  If she dies, you would do the same.
3)  Even your wife's premiums for term seem high.

Bottom line, shop around, cancel the whole life policy, and buy two 30 year terms if you feel you need the insurance or want to lock in low rates while you're young.  And when you cancel, if you MIL gives you any chiet, tell her you realize she's losing $1,200 a year in trailing commissions off of your policy, but that you don't find it in your family's best financial interest.

I'd also be really disturbed by a woman who, whether by poor education or ill intentions, saw you and her own daughter as a $12,000 now + $2,000 a year meal ticket.

bearkat

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Not sure I accidently locked the topic before, or if a moderator did and I just did something bad by unlocking it ....

from looking throught all the comments, just wanted to thank everyone that participated in the discussion. I've got some great action items to follow up on

  • re-evaluate need for life insurance beyond value of mortgage $200M
  • look at 30 year term to offset 44-54 range of "poor time to die" if insurance is needed at all at this point
  • maybe wait until kid(s) to get real policy, again if needed at the time
  • it's not quite apples-to-apples to compare whole growth to stock appreciation since the insurance doesn't really hold stocks .... but in terms of the goal of FI, it absolutely is valid to compare a lower performing asset to a higher one ... and then consciously choose the higher one

To address some uncertainties in case people were interested:

  • My wife and I make $150M gross so that puts at the very bottom of the FED 28% tax bracket, but with deductions it's pretty easy to move down to 25%. We're also square in the middle of the CA 9.3% tax bracket
  • With $12M going to whole life, it will require much improved mustachianism on our part to max out my wife's 403b once she gets in jan 2015. --- Few people, I think would argue for whole life over maxing out tax-advantaged accounts.
  • Pete or Dodge, not sure who said it, but I do like that "the overall effect is a delay in achieving FI and that is the opposite of what this forum is about.

Also, Ive updated the original post to include the illustrations from the company. All the non-guaranteed columns (every column except the far right on the first picture, and every column in the second) assume constant 5.6% dividends (less costs/fees) every year until I die. The premiums are $12,003.70 every year for the first 20 years. I figured this could save people going through what I did, and now this forum would have this information for whoever was curious.

Cheers!

rocklebock

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Thanks for posting this and I would like to encourage others to chime in with their experiences.

Ok, I'll share another one. Part of rockelbock's story sounded like my story - the refer a friend pitch part.

So I met with a NW Mutual agent who was a friend/acquaintance of mine one day. After he realized I wasn't buying a single thing from him he proceeded to ask me to just go ahead and forward him the contact info of everyone of my co-workers so he could solicit them. And he was dead serious. I told him "um, yeah, that is not ever going to happen so don't ask again". I was dumbfounded. Who does that shit?
haha.  I used to have a longterm disability policy on my wife through NWM. At the time she made a lot more than me and I was young and thought we needed the insurance.  I had him quote me some term policies too, but they all included dividends to keep the rates low and I hate that and they were always convertible or something.  Just not what I wanted.  Anyway, he comes by at about the third meeting and he had a list of all my linkedin connections.  He pulled it out and says hey do you have phone numbers handy for x, y, z and is it OK if I drop your name?  I was like, no dude please do not call my friends and I never accepted a meeting with him again. 

Oh yeah, I forgot the part where the forms he asked us to fill out included a bunch of space at the end where you could put in all the personal contact information for your friends and family who might need his services. We didn't do it.

I think there's a good chance your MIL really, truly thinks she's looking out for your best interests while also making money. So I'd probably skip any confrontational "sorry you won't be getting that commission anymore" language, and just say "We have a plan that works perfectly for our family." Repeat ad nauseam. Make sure your wife is on the same page with you so you're both sending MIL the same message.

dandarc

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That whole analysis was just to illustrate a point - the 44-54 window is kind of a fiction - 7% is a conservative estimate based on historical returns, but you'll almost certainly do better or worse in any specific 20-30 year period.

Any way - you might be closer than you think to maxing that 403b if you cancel the whole life - you'll have ~11500 of after tax savings and the 403B is before tax, so that 11500 is darn close to 17500 of before-tax income at a 34% marginal tax rate (25 federal + 9 state) - I come up with a little over 17400 in pre-tax income, so the extra you're paying for this whole life is almost exactly the amount you need to max that account when it becomes available.  So if you're looking for an "easy" way to max that 403b  . . .

Any way, something to think about.

Cheddar Stacker

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The mods would have told you if they locked it. Plus I don't think they had any reason to do so. It didn't get that bad.

Good luck with making the right decision and keeping the peace in the family.

iris lily

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We don't have any life  insurance (well, none that we've spent money on) and we never will since we don't have children. Both of us are self-supporting. We self insure for most things, anyway, and have liability-only coverage even on a couple of tiny houses. Until my friend's mother died, I never saw any earthly use for life insurance for people like us. But I found the following interesting as a tiny justification for life insurance:

My friend's mother died and her life insurance policy paid out to him.  She had been housed in a nursing home at the government's expense for some years. When she died, he claimed that a modest amount of money came to him from that policy. She had strongly wanted to leave something to her children, this was important to her.

So for in this case, life insurance seems to have paid out in a useful way.

ender

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$150M gross? Not $150k?

;)


usmarine1975

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With your Mother in law honesty is key and if your wife is on board she should be present when you notify her mother.

I have yet to add the CV of my policies to my net worth statement.  I know that the
 value is there but its not an investment for me.  Its life insurance and it cost money.

As for long term care my memory tells me that only a portion is exempt from helping pay for ltc once the gov is involved unless u carry ltc insurance. And no I don't have that insurance. I have a living will for that.
« Last Edit: August 04, 2014, 09:06:19 PM by usmarine1975 »

BlueHouse

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$150M gross? Not $150k?

;)
It seems to be quite common in some business circles (maybe more so in Canada?) to use M for 1000 (from the Roman Numeral M), while in the US and in scientific fields, it seems more common to use K (from the Greek Kilo) to signify a factor of 1000. 
Anybody want to chime in on K vs. M for Thousand?  If you use M for thousand, I think you have to use MM for million.


bearkat

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Quote from: enderland on Today at 19:58:33
$150M gross? Not $150k?

;)
It seems to be quite common in some business circles (maybe more so in Canada?) to use M for 1000 (from the Roman Numeral M), while in the US and in scientific fields, it seems more common to use K (from the Greek Kilo) to signify a factor of 1000. 
Anybody want to chime in on K vs. M for Thousand?  If you use M for thousand, I think you have to use MM for million

Yeah I use M as thousand and MM as million in my day job, and sometimes use M and K interchangeably. Sorry for the confusion. If it was a 150 million / year, I'd be having very different questions.

ender

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Quote
Quote from: enderland on Today at 19:58:33
$150M gross? Not $150k?

;)
It seems to be quite common in some business circles (maybe more so in Canada?) to use M for 1000 (from the Roman Numeral M), while in the US and in scientific fields, it seems more common to use K (from the Greek Kilo) to signify a factor of 1000. 
Anybody want to chime in on K vs. M for Thousand?  If you use M for thousand, I think you have to use MM for million

Yeah I use M as thousand and MM as million in my day job, and sometimes use M and K interchangeably. Sorry for the confusion. If it was a 150 million / year, I'd be having very different questions.

I didn't realize that.

One-more-year syndrome would take on an entirely different significances for a Mustachian at that point, lol!

matchewed

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To bring it back to my last two original questions, anyone have experience with family members as insurance agents or being pushy with non-Mustachian financial advice?

I'd keep that one as a bit of common sense. Having someone who has emotional leverage on you asking you to purchase things from them is a bad scenario. I'd say thanks but no thanks and go my own. Maybe put up the boundary that you don't want to discuss financial or insurance matters with them but appreciate their concern.

usmarine1975

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I was an insurance agent that worked with family members.  But I wasn't pushy, it didn't sit well with me.  I worked around agents that could be pushy and had a manager that was (hence the reason I quit).  Sadly the only thing you can do is be direct and straight to the point.  If you are cancelling the policy tell her why.  Don't just say it's non-Mustachian.  Give clear concise reasons and have your wife present as it's your MIL. 

I only got pushy once and it was because a client was not utilizing their companies 401k matching contribution.  The individual and I are pretty close so I knew him well and he knew me well enough to know that I was thinking of him.  Unfortunately he didn't listen right away but fortunately he did eventually listen and now has a pool of money that he wouldn't have had if I hadn't been pushy.  Sadly we see a lot of this.  It's amazing how many people don't utilize their company matching 401k because they don't want to take the risk or can't afford too.  Anyway I am going away from the topic.

You and your wife need to discuss this and then take the time to discuss it with your MIL if she is pushy she may get offended, and even upset.  In time she will get over it although she might call you names for a time.  Just man up take the wife along and do what you got to do.  My parents don't like the way my wife and I do some things and you know what I appreciate that they care enough to have an opinion but it doesn't mean I need to change what I am doing.

Good luck the whole MIL territory can be a fun one.  I got lucky and have some awesome in laws. 

Oldguy

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I've always considered life insurance to be risk mitigation and mostly for people who could not read mortality tables. I found good mortality tables at the SSA and CDC to post to make my points , but the best I found for this thread was actually a life expectancy calculator at "who would have thought?" Northwestern Mutual. If you and your wife choose to use their calculator and print the results you would have some good information to share with your MIL to back your decision. You can find the link to THEIR calculator with a simple search. I'm happy to find THEY believe I will live to be 90+ ymmv

MooseOutFront

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$150M gross? Not $150k?

;)
It seems to be quite common in some business circles (maybe more so in Canada?) to use M for 1000 (from the Roman Numeral M), while in the US and in scientific fields, it seems more common to use K (from the Greek Kilo) to signify a factor of 1000. 
Anybody want to chime in on K vs. M for Thousand?  If you use M for thousand, I think you have to use MM for million.
Correct.  I do commercial lending for money and we use M and MM.

frugalnacho

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It's even used in the scientific field.  Million BTUs are expressed as MMBtu. 

bearkat

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Thanks for the tip,  Oldguy, the link I found for NWM Lifespan calculator was

http://www.lifespancalc.com

It said I should live to 88, we'll see.

dandarc

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Shopping to replace my term insurance with something a lot cheaper, and thought of this thread when I got to the fine-print in the application.  This policy, which happened to be the least expensive policy I found, is actually not labeled a proper term insurance policy, but a universal life without a cash value component.  Here's how it works:

1.  Level premium for the initial term.  I was originally planning on getting a 15-year, because it is only $3 / month or about 15% more than the 10 year.  20 is like 50% more than 15.  I am now leaning heavily towards 10 years because:

2.  At end of term, the premium remains level, but the benefit decreases each year until you get down to 10K, when they will start increasing.  Or you can opt to pay increasing premiums to keep your benefit.

I need to look at the projections for that reducing benefit, but this seems to fit what we are looking for pretty darn well - we plan to FIRE in ten years, but even if that doesn't go according to plan, our life insurance needs will certainly be trending down.  Protective Life Insurance Company if anyone else wants to check it out - using geico's link to lifequotes.com to do the search here.

chesebert

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I know this is an old thread but I just had a Northwestern Mutual rep coming to my office and giving me the whole spiel on cash value insurance and how that's just like Roth IRA but better with guaranteed 5-6% after tax dividend and no annual max investment...blah blah blah.

I asked him if I can access my money right away and he was like...well, if you invest with us for 20 years then you can access 99% of your money, but for the first few years we front load the insurance portion. In other words, he was telling me that there is a significant load for probably 10 years and only after I have paid into the system hundreds of thousands then I can really enjoy the 5-6% after tax return.

I thought he was joking, but he was very serious and I think he thinks he is doing me favor by telling me about this awesome investment opportunity. To be fair, he did tell me he will get a fat commission check if I buy the policy; at least he is honest with that.


lhamo

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Another factor that many people aren't aware of/don't consider, and that the insurance agents will never mention, is the social security survivor benefit for minor children and the surviving parent (or guardians, if both parents die prematurely).  It only pays out until the kids reach 15 for the parent/guardians, and only until high school graduation or age 18 for the kids, but depending on your social security earnings it can be a significant amount -- in our family, the survivor benefits would have exceeded takehome pay for either my DH or I as we were having a lot diverted to retirement accounts. 

The family benefit amount is clearly indicated on your social security statement, and should be taken into account when deciding whether or not to purchase or renew term insurance.  In our case we decided not to buy new term policies when our employer-provided insurance ended with our resignations, since we already have plenty of assets.  The social security payments would be nice, but are not needed.  We also didn't buy supplemental insurance several years ago because the employer-provided coverage was plenty to cover our needs.

BTDretire

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If it was a good idea for your MIL to cover her daughter with a big insurance policy,
you should have suggested MIL pay for it.
 Drop the Whole life get a Term insurance., and you probably don't need $1M either.
 I would do a math project comparing the end result of having whole life vs term
and investing the difference in the stock market.
Just in case you need to prove your point to MIL.
MIL may like the option of paying for the Whole Life.
 Long term historical growth of the S&P is about 10%.
You're young, you belong in the market.

MayDay

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Another factor that many people aren't aware of/don't consider, and that the insurance agents will never mention, is the social security survivor benefit for minor children and the surviving parent (or guardians, if both parents die prematurely).  It only pays out until the kids reach 15 for the parent/guardians, and only until high school graduation or age 18 for the kids, but depending on your social security earnings it can be a significant amount -- in our family, the survivor benefits would have exceeded takehome pay for either my DH or I as we were having a lot diverted to retirement accounts. 

The family benefit amount is clearly indicated on your social security statement, and should be taken into account when deciding whether or not to purchase or renew term insurance.  In our case we decided not to buy new term policies when our employer-provided insurance ended with our resignations, since we already have plenty of assets.  The social security payments would be nice, but are not needed.  We also didn't buy supplemental insurance several years ago because the employer-provided coverage was plenty to cover our needs.

This is why we have a little term insurance but not much. One person plus kids could live fine off SS, and let the current savings grow for ten more years until the kids age out of SS.

BTDretire

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Thanks for the tip,  Oldguy, the link I found for NWM Lifespan calculator was

http://www.lifespancalc.com

It said I should live to 88, we'll see.

 Oh man, I did the Lifespan Calculator, might need to do OMY a few times!
I got 91 years.

Fuzz

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The Northwestern Mutual guys are good. One of my professional acquaintances gave a NWM rep my name and I went to coffee with him. I was amazed by this sales technique: lots of eye contact, focus on my priorities, etc.

I'm told that a good NWM rep can pull in hundreds of thousands of dollars in passive income in their 40s, just based on their ongoing commission streams. My guess is that it's like real estate agents though, and the less successful ones are paying for the privilege of calling themselves an agent and living on stress.

My imagined story behind the story for you. Your MIL is not one of the agents crushing it. Instead, she feels intense pressure to measure up, and believes in the product. She looks at you making $120K/year as a 24 year old and is reminded that the world is profoundly unfair. Without verbalizing her thoughts as such, she justifies that you have plenty of money and won't miss a little, and therefore is entitled to sell you this product that is not appropriate for you and your situation.

I have no idea how you get out of this situation without pissing off MIL, or at least making her ashamed or guilty. Avoid that, because you will deal with her for decades.

What's the most socially acceptable way out here? Idk...tell her you want to buy a new Tesla or something because it sounds like she'll understand that better than investing in a bunch of taxable accounts...change your bank account so they can't auto-withdraw your premium and wait for them to cancel? Develop a drug habit?

One question I have is if you quit, are her commissions clawed back? If I understood previous posters, your MIL's commission is already $4800-$5600 out of your $12K, and you could surrender your policy and recoup $9,400. So where does that extra $2-3K come from? NMW? If you cancel, MIL nets around $5K and you net around $9K and combined you come out $2K ahead?