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sandybeth

Posted: Sun Aug 12, 2007 9:41 pm

Guest

Hubby has a Modified Premium Variable Whole Life Insurance policy with
Equitable. Bought in 93, so it's 14 yrs out. Put in $35000 over 7
yrs. Mix of funds. Grew substantially for first 7 yrs, then tanked
in 00-02 (down to $30000, eek!). Now back up to $60,000. Death
benefit a little over $113,000. We're both retired, age 60, have
pensions, substantial other savings, including IRA's, stocks/fund
investments, annuity. Both healthy. Should we cash in this policy &
just get something that's term? I think the costs on this thing are
mighty high, nearly impossible to figure out unless one pours through
many papers & documents--admin fee, sales cge, insurance charges,
etc. Maybe we just need to monitor the investment mix more closely &
maybe asset allocate it. Recently I moved it's 500 Index and Common
Stock funds into money market funds just in case things take another
dive before we decide what to do.

Cal

Posted: Mon Aug 13, 2007 2:27 am

Guest

"sandybeth" <sandyhb6@yahoo.com> wrote in message
news:1186938521.494125.216710@m37g2000prh.googlegroups.com...

Quote:

The Modified Premium aspect is apparently over, so it is considered to
simply be V/W/L contract at this point.

The "costs" of ANY Variable Life product are HIGH in comparison to similar
products with a FIXED value. There is the cost of the purchase of the funds
in the account, IN ADDITION TO THE COST of the Life Insurance Protection.
This is "offset" supposedly by the potential "up-side" availabe of being "in
the market".

You paid in 35K over the first 7 seven years, and the contract as you
stated WAS worth 60K, plus the fact that he has been INSURED for over 100K
for the past 14 years. If you take into consideration the "COST OF THE
INSURANCE" OVER THE 14 YEAR PERIOD", I would say that you have not done too
shabbily.

I personally am not an advocate of any Variable products, so I can only tell
you that it really depends on YOUR "NEED" for the Life Insurance (which is
costing you almost nothing at this point vs. a NEW Term policy which would
be VERY expensive to purchase (assuming GOOD health).

Cal Lester CLU

joetaxpayer

Posted: Mon Aug 13, 2007 6:44 am

Guest

sandybeth wrote:

We're both retired, age 60

You can buy a policy on hubby for about $600/yr, 20 yr term, with a
$100K face amount.
The real question is this: what is the purpose of the insurance? My wife
and I each have insurance so if the other dies, the survivor doesn't
have to sell the house, and can continue to care for our child. The
policies are term to expire once college starts, which should also be
after we are both retired. It seems you can put that money to better use.
JOE

Guest

Posted: Mon Aug 13, 2007 9:50 pm

On Aug 12, 10:41 am, sandybeth <sandy...@yahoo.com> wrote:

Quote:

investments, annuity. Both healthy. Should we cash in this policy &
just get something that's term? I think the costs on this thing are
mighty high, nearly impossible to figure out unless one pours through
many papers & documents--admin fee, sales cge, insurance charges,
etc. Maybe we just need to monitor the investment mix more closely &
maybe asset allocate it. Recently I moved it's 500 Index and Common
Stock funds into money market funds just in case things take another

It'll suck reading through the prospectus but it'll be a necessary
evil. Many W/U/V policies tend to be very costly at the start and then
decrease expenses drastically after 15-20 years. (It's a great sales
gimmick -- "after X years, you won't be paying anything" because
insurance companies know many many many people simple cancel their
policies before the cheaper/free ride starts.) If you have 14 years on
your policy, your sunk costs are gone already. The key is what are the
expenses going forward. The questions to answer are:

Do you still need life insurance? If so, how much would it cost to get
term life to replace what you have already?

If you can get term replacement cheaply, then you have to look at the
expenses going forward. Are they low enough where tax-deferred growth
can beat taxable investments?

If you do decide to cash out, you should look into doing a 1035
exchange into a Vanguard variable annuity. That'll defer taxes due on
it until the time you actually need the money.

Cal

Posted: Mon Aug 13, 2007 11:50 pm

Guest

"Cal" <cal-lester@comcast.net> wrote in message news:...

Quote:

Do you still need life insurance? If so, how much would it cost to get
term life to replace what you have already?

If it "costs" at all, it invariably would be MORE than the contract
of insurance that you currently own. I am NOT talking about ANY
potential cost due to the market fluctuation, but only to the actual
Life Insurance COSTS.

Quote:

If you can get term replacement cheaply, then you have to look at the
expenses going forward. Are they low enough where tax-deferred growth
can beat taxable investments?

ANY Term Insuranec product that "Might be issued" today MUST
cost more that the on-going cost of a contract in it's 15th year.

Quote:

If you do decide to cash out, you should look into doing a 1035
exchange into a Vanguard variable annuity. That'll defer taxes due on
it until the time you actually need the money.

Without going into the merits of one company over another,
the only reason that I can see for you to cash in the contract
is to put the money to better use.
Therefore why in the world would you start a NEW Contract,
with NEW aquisition costs???????????????????????

The PRIMARY question to answer is "Is there a NEED for
Insurance at this time".

Cal Lester CLU

kastnna

Posted: Tue Aug 14, 2007 12:12 am

Guest

Sandy,

It depends almost entirely on your needs.

If the insurance is for "declining debt" protection or (was) for
income replacement you may find term will suit your purpose. Get a low
cost guaranteed term insurance policy (premiums stay level) that will
last a couple of years longer than you expect the debt to. FYI, I do
not think you can get term longer than 20 years at your age, but I
could be mistaken. If this is your route, 1035 the money from the old
policy into a low cost variable annuity as someone else suggested.

If the insurance is for estate tax liquidity and/or you have a strong
desire to leave it as an inheritance, term probably isn't going to cut
it. 2001 CSO tables predict that for spouses within 5yrs of each
other, there is a 50.3% chance one of the two will live to at least
age 90. Individually your life expectancy is around age 83. Your 20
year term will last just long enough to not pay you a penny
(statistically speaking). However, you have other options to consider.
Instead of paying for Whole Life that charges extra to build up a
substantial cash value, get a guaranteed Universal Life. They have
little or no cash value and as a result cost much less than WL, but
they run up to age 130 (unlike term). You can 1035 exchange all or
part of the cash from the old policy into the new one. There's even a
chance that you have enough existing cash value to offset the premium
on the new policy (IOW, no out-of-pocket premiums). The drawback to
this is that there is little or no cash value should you ever
terminate the policy. However, a life settlement can circumvent this
problem (that's another discussion).

Guest

Posted: Tue Aug 14, 2007 12:31 am

On Aug 13, 12:50 pm, "Cal" <cal-les...@comcast.net> wrote:

Quote:

Therefore why in the world would you start a NEW Contract,
with NEW aquisition costs???????????????????????

Luckily Vanguard has no aquisition costs. All they charge is a 0.30%
annual expense ontop of their mutual funds (which are industry lows).
Depending on the asset class being held, 0.30% can pay for itself with
the tax-deferral benefit.

Cal

Posted: Tue Aug 14, 2007 2:46 am

Guest

<wyu@talisys.com> wrote in message
news:1187037024.498660.227970@i38g2000prf.googlegroups.com...

Quote:

On Aug 13, 12:50 pm, "Cal" <cal-les...@comcast.net> wrote:
Therefore why in the world would you start a NEW Contract,
with NEW aquisition costs???????????????????????

Luckily Vanguard has no aquisition costs. All they charge is a 0.30%
annual expense ontop of their mutual funds (which are industry lows).
Depending on the asset class being held, 0.30% can pay for itself with
the tax-deferral benefit.

I am NOT familiar with that contract. HOWEVER
Are you saying that NO ONE receives a commission form the
sale??????????
Cal

Guest

Posted: Tue Aug 14, 2007 4:03 am

On Aug 13, 3:46 pm, "Cal" <cal-les...@comcast.net> wrote:

Quote:

I am NOT familiar with that contract. HOWEVER
Are you saying that NO ONE receives a commission form the
sale??????????

https://flagship.vanguard.com/VGApp/hnw/accounttypes/retirement/ATSVarDefAnnFeesExpContent.jsp

Basically, it's a minimal insurance contract wrapping around Vanguard
mutual funds to create a tax-deferral account for those who've run out
of 401K/IRA/Roth IRA contribution dollars. There is no life insurance
component which is why I stated use this option only if the original
policy was going to be cashed out. So instead of cashing out and
paying income tax immediately, 1035 exchange into a Vanguard VA and
let it continue to grow. VAs have no RMD so that would let you draw
down 401Ks/IRAs first before moving onto Roth IRAs and VAs.

Cal

Posted: Tue Aug 14, 2007 4:01 pm

Guest

<wyu@talisys.com> wrote in message
news:1187049788.186227.74880@e9g2000prf.googlegroups.com...

Quote:

On Aug 13, 3:46 pm, "Cal" <cal-les...@comcast.net> wrote:
I am NOT familiar with that contract. HOWEVER
Are you saying that NO ONE receives a commission form the
sale??????????

https://flagship.vanguard.com/VGApp/hnw/accounttypes/retirement/ATSVarDefAnnFeesExpContent.jsp

Basically, it's a minimal insurance contract wrapping around Vanguard
mutual funds to create a tax-deferral account for those who've run out
of 401K/IRA/Roth IRA contribution dollars. There is no life insurance
component which is why I stated use this option only if the original
policy was going to be cashed out. So instead of cashing out and
paying income tax immediately, 1035 exchange into a Vanguard VA and
let it continue to grow. VAs have no RMD so that would let you draw
down 401Ks/IRAs first before moving onto Roth IRAs and VAs.

I see that I misunderstood your original post. I thought that you were
suggesting it as a TERM replacement for their present contract.

Cal Lester CLU

Guest

Posted: Wed Aug 15, 2007 2:23 pm

On Aug 12, 12:41 pm, sandybeth <sandy...@yahoo.com> wrote:

Quote:

To determine which financial products you need, a comprehensive needs
analysys needs to be done with a competent financial advisor. Based
on the limited information you have provided, any advise given is bad
advise... even from me.

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