Thinking of dropping State Farm 10 Pay Life Insurance

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welloiledinvestor
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Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

I got this $100k "10 Pay Life" from StateFarm for $233/mo.

"10 Pay Life" for reference is This whole life insurance policy provides a level death benefit for the lifetime of the insured. As the name implies, the policy requires premium payments for 10 years. Once all 10 years of premiums have been paid, the policy becomes paid up and no additional premiums are required.

I am healthy, non-smoker, 36-y-o male.
Married and expecting our first baby in few months. I am the main breadwinner and wife will likely not work for several years after giving birth.

I just got $500k 20-years term life for $24/mo. when I shopped with Zander website over the weekend.

Should I let the Stat farm plan be or I am overpaying? Thank you.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Lee_WSP »

How far into the $27,960 premium are you?

Unless you're really close to the finish line, it doesn't make mathematical sense to continue paying that much for only $100k in death benefits which is expected to be 50 years off. Imagine how much more you'd have with a simple 60/40 portfolio if you just invested the $233 ea/mo.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Stinky »

welloiledinvestor wrote: Mon Apr 12, 2021 3:51 pm I got this $100k "10 Pay Life" from StateFarm for $233/mo.

"10 Pay Life" for reference is This whole life insurance policy provides a level death benefit for the lifetime of the insured. As the name implies, the policy requires premium payments for 10 years. Once all 10 years of premiums have been paid, the policy becomes paid up and no additional premiums are required.

I am healthy, non-smoker, 36-y-o male.
Married and expecting our first baby in few months. I am the main breadwinner and wife will likely not work for several years after giving birth.

I just got $500k 20-years term life for $24/mo. when I shopped with Zander website over the weekend.

Should I let the Stat farm plan be or I am overpaying? Thank you.
Don’t know if you’re overpaying - but you’re sure paying a lot. State Farm is a great company for auto and home insurance, but their life insurance is very expensive.

How old is the policy?

As to your life insurance coverage, it’s much better to have level term insurance. However, it’s possible that your whole life policy might be useful to you as fixed income asset, especially if the policy is almost 10 years old.

To assess whether the policy is worth keeping, you should get an “inforce illustration”. You can request that from your agent or directly from the company. When you have that, we can look at the increase in cash value year to year net of premiums paid, and see if that provides a reasonable return on your cash value.

Please post back with details and with any questions.
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welloiledinvestor
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

Stinky wrote: Mon Apr 12, 2021 4:30 pm
welloiledinvestor wrote: Mon Apr 12, 2021 3:51 pm I got this $100k "10 Pay Life" from StateFarm for $233/mo.

"10 Pay Life" for reference is This whole life insurance policy provides a level death benefit for the lifetime of the insured. As the name implies, the policy requires premium payments for 10 years. Once all 10 years of premiums have been paid, the policy becomes paid up and no additional premiums are required.

I am healthy, non-smoker, 36-y-o male.
Married and expecting our first baby in few months. I am the main breadwinner and wife will likely not work for several years after giving birth.

I just got $500k 20-years term life for $24/mo. when I shopped with Zander website over the weekend.

Should I let the Stat farm plan be or I am overpaying? Thank you.
Don’t know if you’re overpaying - but you’re sure paying a lot. State Farm is a great company for auto and home insurance, but their life insurance is very expensive.

How old is the policy?

As to your life insurance coverage, it’s much better to have level term insurance. However, it’s possible that your whole life policy might be useful to you as fixed income asset, especially if the policy is almost 10 years old.

To assess whether the policy is worth keeping, you should get an “inforce illustration”. You can request that from your agent or directly from the company. When you have that, we can look at the increase in cash value year to year net of premiums paid, and see if that provides a reasonable return on your cash value.

Please post back with details and with any questions.
It's few years old, 30 months to be exact. I just asked the company and they said it's something I am given when I signed up. They were curious what I was looking for. I cannot find it if it was given to me by agent.
Lee_WSP wrote: Mon Apr 12, 2021 4:22 pm
How far into the $27,960 premium are you?

Unless you're really close to the finish line, it doesn't make mathematical sense to continue paying that much for only $100k in death benefits which is expected to be 50 years off. Imagine how much more you'd have with a simple 60/40 portfolio if you just invested the $233 ea/mo.
In 15 days, I would have paid $6,990 (25% of $27,960). I have been paying it for 30 months, since early Oct. of 2018.

Thank you both for offering to help.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Rex66 »

Request an inforce illustration, current

They are required by law to provide

Tell them that or u will contact state commissioner
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welloiledinvestor
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

Rex66 wrote: Mon Apr 12, 2021 7:25 pm Request an inforce illustration, current

They are required by law to provide

Tell them that or u will contact state commissioner
I will email my agent and ask for it. Thank you!
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Stinky »

welloiledinvestor wrote: Mon Apr 12, 2021 7:22 pm
It's few years old, 30 months to be exact. I just asked the company and they said it's something I am given when I signed up. They were curious what I was looking for. I cannot find it if it was given to me by agent.
That’s a most unhelpful response from the insurance company. I’m not impressed. Hopefully either the agent or the company will come through for you soon.

When you get the illustration, we’ll want to look at the change in the cash value between year 2 and year 3. You’re paying $233 x 12, or $2,796, in premium for that year. If your cash v as lue went up by less than $2,796, I definitely think you should lapse the policy, If you keep the policy, you’ll be just throwing good money after bad.

The only reason I’d keep the policy is if you’re uninsurable and can’t qualify for term insurance.

I’m betting that you should lapse the policy. We can mske sure of that conclusion when we get numbers from the illustration.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Lee_WSP »

welloiledinvestor wrote: Mon Apr 12, 2021 7:22 pm In 15 days, I would have paid $6,990 (25% of $27,960). I have been paying it for 30 months, since early Oct. of 2018.

Thank you both for offering to help.
So, the $7k is a sunk cost, you can't get it back. What you're looking at is whether the additional money is worth having $100k added to your estate and the associated opportunity costs (what you could've earned after taxes on your premiums; or bought).

My rough math puts it as not too dissimilar to a 2/3% yield savings account, the biggest drawback being you can't touch it.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Helios »

Perhaps they can 1035 your balance to something else.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Stinky »

Helios wrote: Mon Apr 12, 2021 9:22 pm Perhaps they can 1035 your balance to something else.
A 1035 likely would be an exchange into an annuity. The State Farm cash value may not be large enough to hit the minimum policy size for most annuities.

I would definitely not recommend that OP exchange this whole life policy for another cash value life insurance policy, like universal life.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Katietsu »

Helios wrote: Mon Apr 12, 2021 9:22 pm Perhaps they can 1035 your balance to something else.
The only reason to 1035 is to avoid taxes when you get back more than the premiums paid. Not going to be an issue here, I suspect.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Helios »

I used a 1035 exchange to change from a term ins policy to a single premium annuity. The amount of it was much less than op's.
It is now worth 3x the original amt, zero $ added.

I also had a 403b annuity from an employer that I 1035'd to purchase additional years in my next employers defined benefit plan.
Just my experiences.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by tj »

Helios wrote: Mon Apr 12, 2021 9:50 pm I used a 1035 exchange to change from a term ins policy to a single premium annuity. The amount of it was much less than op's.
It is now worth 3x the original amt, zero $ added.

I also had a 403b annuity from an employer that I 1035'd to purchase additional years in my next employers defined benefit plan.
Just my experiences.
How do you 1035 a term insurance policy to a SPIA? I didn't think term policies had cash value?
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Helios »

It was a mixed whole life and term. Talk to your agent, they can reluctantly do a 1035 for you, or you can move to another plan.

None of these exchanges were difficult, just that the agents can lose money, and they can threaten surrender charges.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by tj »

Helios wrote: Mon Apr 12, 2021 10:04 pm It was a mixed whole life and term. Talk to your agent, they can reluctantly do a 1035 for you, or you can move to another plan.

None of these exchanges were difficult, just that the agents can lose money, and they can threaten surrender charges.
...then it wasn't a term policy.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Helios »

Let me add one other thing that probably made these exchanges work.
I lined up the destinations for the exhange first. Those plans had me sign a single page request and THEY sent that to the original location.
My guess is that helped to have a destination working for me.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

I reached out to my original agent and she is gonna have the company mail it to me. Meanwhile, I found this document, it is titled "in force illustration." I tried typing it out but it was a pain. I hope the image is legible. Let me know what you think. I appreciate all the help. Image
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by tj »

The image only shows the first few years.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

Here is more years. Image
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

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welloiledinvestor wrote: Wed Apr 14, 2021 8:08 pm Here is more years. Image
Thanks for posting. This is very useful.

The bad news is that this policy absolutely hammers you in the first two policy years. You paid $5,608 for two years, and your cash value was only $1,538 at the end of the two years. (All of the values I quote will be from the non-guaranteed cash value.). That difference of almost $4,100 went mostly to agent commissions and issue/underwriting expenses, and it’s a “sunk cost” that you can’t recover.

The not so good, but not so terrible bad, news is that you’re now building cash value, at a very slow rate. In the current policy year, your cash value increases to $4,473 from $1,538, or by $2,935. That’s a little more than your $2,804 premium for this year, so you made a “profit” of $129. Plus you got the value of $100k of insurance protection, which might be worth another $60 or so based on your Zander quote. You could work out the numbers yourself for future policy years.

Let’s go out to policy year 11, which is the first time you won’t pay premium. In that year, your cash value will grow to $30,965 from $29,914, or $1,041. Plus $60 for pure insurance brings it to $1,101. Divide that by your beginning cash value of $29,914, and I get a 3.7% “return” for that policy year.

So, your current policy has a premium that’s probably straining your monthly budget, and is providing way less insurance for a way higher premium than your term policy. There’s a savings element that will return over 3%, but it’s very inflexible (you can’t put in more savings, and you need to take out a “policy loan” or surrender your policy to get at the cash value).

All things considered, I’d probably lapse the policy, take the cash value and invest it per your savings plan. That will free up a lot of space in your monthly budget for savings in a more attractive place than a whole life policy. I also wouldn’t skimp on term insurance - is $500k really enough, or should you buy $1 million or more.

Post back with questions.
Last edited by Stinky on Thu Apr 15, 2021 5:19 am, edited 1 time in total.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by mrspock »

Looks like this isn’t indexed to inflation either? If this is the case, in 50 years this thing loses around 6/7ths of its value. Meaning your 100k is worth around 14k in today’s dollars. Combined with the opportunity cost vs a 60/40 portfolio, this is brutal.

I’d dump this like a hot potato.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by inbox788 »

Stinky wrote: Mon Apr 12, 2021 8:11 pm
welloiledinvestor wrote: Mon Apr 12, 2021 7:22 pm
It's few years old, 30 months to be exact. I just asked the company and they said it's something I am given when I signed up. They were curious what I was looking for. I cannot find it if it was given to me by agent.
That’s a most unhelpful response from the insurance company. I’m not impressed. Hopefully either the agent or the company will come through for you soon.
I don't understand what question you asked the insurance company, but they really want to help you keep the policy so they can keep earning their commissions.

Where or why did you "sign up" or did someone sell it to you? Who?

If they were doing their job correctly, they would have established that you were a millionaire and wanted to give your future children a guaranteed inheritance of 100k plus whatever additional return this policy could generate for the cost of under $30k paid over the first 10 years (non MEC). Most average folks have better use of these funds during their lifetime than predetermined inheritance, and even those more wealthy may have higher return alternatives. Calling it life insurance in the typical sense is a misnomer, it's more an advance endowment for your children as part of your estate plan. If that is your intent, then calculate your live expectancy and how this low risk low return investment compares to alternatives.

If you really need life insurance, you should address it in other ways (i.e. term life for the term of need).

Anyway, most folks that have been sold these policies figure it it doesn't really address their needs or the returns are so low and not worth it.

Missed the photos before, but see them now. Ignoring the small life insurance value which is mostly insignificant and complicated, the main growth can be calculated by looking at the guaranteed cash value (and only the guaranteed values). So if you compare years 10 to 11, it goes up around 3.3% and years 29-30 goes up around 2.7%. I didn't calculate the others, but assume it's in the same range. Overall you're probably looking at a little better than 3%, so it's a little better than 30 year treasuries.

Getting 2-3% for 30 years doesn't sound good, but for wealthy investors who want to preserve capital and are investing in 40/60 or more conservative portfolios, a large part of that 60% bonds is returning very low rates right now, and that's where this type of scheme compares favorably to. For the rest of us, think different.

BTW, those non-guaranteed columns are mostly meaningless, and seldom do the illustration materialize. Yours is the most muted I've seen, and the amount of PAU they buy is anemic, so even if they were realized, it's not all that meaningful. The way the numbers are presented must reflect the current low interest rate environment we're in and calculation requirement. I'm sure the insurance company would rather not be using those numbers.

Can you post the next 30 years? What are the guaranteed cash values year 50 and 51?

[Remember if your cash value is 75k, your insurance is only going to pay an extra $25k, not an additional 100k, so while the risk may go up the payoff is going down and net value is still small to insignificant]
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Rex66 »

Insurance companies do not want you to keep paying permanent insurance after several years. They actually stop commission on all such policies after a few.

The guaranteed column is important. Just look what is happening to Ohio national policies.

2% is inflation so getting such a return is a loss of purchasing power.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by mr_brightside »

so you're getting 1/5th the insurance for about 5X the cost.

Seems like an easy decision. Agree you may want to add some term coverage (more than $500K)

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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

Thank you all for taking the time to give me your feedback. I am grateful.

To answer some of your questions, I was emotionally in a bad place. I had lost faith in agents and she was friendly at the time. I admit, I should have taken the quote and compared it with online quotes. Past is past. I have learned my lesson.

Due to my income, Zander said at this time $500k would be sensible. I personally asked for $1M. In two or three years, once my income has gone up, I will get another term insurance. I plan on having two kids and $500k alone won't cover it.

I didn't mention that I have employer-paid $80k, but I know usually we are not supposed to consider it since if you lose your job for whatever reason, you cannot take the policy with you.

I will wait until my policy with Zander goes through completely before calling State farm.
How should I word it when I call them? Do I need to ask for the cash value that has build up or they'll offer it?
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Stinky »

welloiledinvestor wrote: Thu Apr 15, 2021 7:09 am Thank you all for taking the time to give me your feedback. I am grateful.

To answer some of your questions, I was emotionally in a bad place. I had lost faith in agents and she was friendly at the time. I admit, I should have taken the quote and compared it with online quotes. Past is past. I have learned my lesson.

Due to my income, Zander said at this time $500k would be sensible. I personally asked for $1M. In two or three years, once my income has gone up, I will get another term insurance. I plan on having two kids and $500k alone won't cover it.

I didn't mention that I have employer-paid $80k, but I know usually we are not supposed to consider it since if you lose your job for whatever reason, you cannot take the policy with you.

I will wait until my policy with Zander goes through completely before calling State farm.
How should I word it when I call them? Do I need to ask for the cash value that has build up or they'll offer it?
I think you’re taking a good path on all fronts.

Just call State Farm when you are ready, and tell them that you want to surrender the policy. There will likely be a written form you’ll need to fill out. Make it clear that you want the cash value sent to you.

Best of luck to you. Post back with questions.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by tj »

mrspock wrote: Wed Apr 14, 2021 8:48 pm Looks like this isn’t indexed to inflation either? If this is the case, in 50 years this thing loses around 6/7ths of its value. Meaning your 100k is worth around 14k in today’s dollars. Combined with the opportunity cost vs a 60/40 portfolio, this is brutal.

I’d dump this like a hot potato.
I wasn't aware that that they had inflation adjusted cash value insurance policies.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by mrspock »

tj wrote: Thu Apr 15, 2021 5:24 pm
mrspock wrote: Wed Apr 14, 2021 8:48 pm Looks like this isn’t indexed to inflation either? If this is the case, in 50 years this thing loses around 6/7ths of its value. Meaning your 100k is worth around 14k in today’s dollars. Combined with the opportunity cost vs a 60/40 portfolio, this is brutal.

I’d dump this like a hot potato.
I wasn't aware that that they had inflation adjusted cash value insurance policies.
Maybe they don’t, I was just shocked to see the chart with 100k in 30 years (!!!). Makes the entire product category junk in my eyes”, just buy term life insurance while you are pre-FI (to the point of your “number”), have dependents and be done with it IMO.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

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tj wrote: Thu Apr 15, 2021 5:24 pm
mrspock wrote: Wed Apr 14, 2021 8:48 pm Looks like this isn’t indexed to inflation either? If this is the case, in 50 years this thing loses around 6/7ths of its value. Meaning your 100k is worth around 14k in today’s dollars. Combined with the opportunity cost vs a 60/40 portfolio, this is brutal.

I’d dump this like a hot potato.
I wasn't aware that that they had inflation adjusted cash value insurance policies.
They don't have such a critter.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by inbox788 »

mrspock wrote: Thu Apr 15, 2021 5:29 pmMaybe they don’t, I was just shocked to see the chart with 100k in 30 years (!!!). Makes the entire product category junk in my eyes”, just buy term life insurance while you are pre-FI (to the point of your “number”), have dependents and be done with it IMO.
It took me a long time to understand this product wasn't for you and me. It's for the rich person with billions who wants to leave $100M to a child or grandchild tax-free in 30 years. What other "investment" guarantees that? Scaled up 1000x, this policy does it for 1000 x $233 x 12 x 10 = $27.96M. You could put $100M in the bank today and assuming no negative interest rates, that would work too. And if there is a small positive interest rate, you could do it with less, but exactly how much less? A 10 year CD is the longest I've heard of and it's not much more than 1%. A 30 year treasury? About 2.3%? Scale down if you only want to leave $10M or $1M.

Yeah, if you invest it (same $28M) conservatively, the're a 90-99.99% chance you'll do better in 30 years, but not guaranteed.
welloiledinvestor wrote: Thu Apr 15, 2021 7:09 amI will wait until my policy with Zander goes through completely before calling State farm.
That's usually the order, but in your situation, I wouldn't worry about it and get all the balls rolling at the same time. A lot has to go wrong for it to matter.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Rex66 »

The tax free is not that meaningful

Taxable also gets a step up in basis

Neither is free from estate taxes if they apply
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by inbox788 »

Rex66 wrote: Thu Apr 15, 2021 7:48 pm The tax free is not that meaningful

Taxable also gets a step up in basis

Neither is free from estate taxes if they apply
Not if the taxable has losses! (Sorry kids, said the Enron and Lehman CEOs)

And good question about the estate taxes and life insurance, not that it's a common situation. https://www.investopedia.com/articles/p ... urance.asp

You could gift $15k in premiums for each of the 10 years taxfree, though I don't know if this would be different or the best use if you're trying to transfer more than $10M to the next generations. Annual gift might have better uses. Overall lifetime benefits from earlier gifting up to the limit, and letting it grow after it's been properly sheltered.

Anyway, if you're going to spend $28M on this scheme, you can spare another $28M on VTI and call it a 50/50 AA inheritance, at least at start. Or if you're that poor, $14M/$14M each, but the spoiled ungrateful brat may put up a fit.

I don't worry about it, and I don't think OP has to worry about it .
Rex66
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Rex66 »

Nobody would recommend such an approach

One would diversify

If your going to say that then there is also a chance the insurance company goes under and that’s way above the state safety net programs

Besides you already seem to know the odds are high that investing performs superior

WL is a bad suggestion even for the super wealthy in the example you gave. If you wanted a guaranteed amount specifically at death then no lapse gUL is the correct insurance product
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by inbox788 »

Rex66 wrote: Thu Apr 15, 2021 8:16 pm Nobody would recommend such an approach

One would diversify

If your going to say that then there is also a chance the insurance company goes under and that’s way above the state safety net programs

Besides you already seem to know the odds are high that investing performs superior

WL is a bad suggestion even for the super wealthy in the example you gave. If you wanted a guaranteed amount specifically at death then no lapse gUL is the correct insurance product
If I ever need this, I'll be sure to get a quote to compare WL to gUL. Does look like you can get paid up in 30 years. Using this illustration $3k/500k (6k/M * 30 * 100M), it does appear you could do it with only about $18M, saving about a third initially.

https://bravopolicy.com/life-insurance/ ... nce-works/

Would be good to compare annualized returns. Hard to do the 10 or 30 years of payments, but $18M or 28M to $100M held 50 years (say ages 30-80) gets 3.49 and 2.58% annualized returns. Longevity calculations may also play a part.

https://www.buyupside.com/calculators/a ... return.htm
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Rex66 »

If one wants to use insurance (which is almost always going to produce less), then no lapse gUL will always GUARANTEE a higher death benefit. These products also have little to no CSV. WL could theoretically beat (not guaranteed) it but only if dividends rise a lot over the life of the policy (unlikely but possible).

You can limited pay gUL. MEC status doesn’t matter bc no CSV.
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

I wanted to give you guys some update. Thank you for supporting me and giving me your feedback. I really appreciate it. I reached out to agent through email. Agent wanted to talk and I said, I have made my decision and I want it to be over with. They have my information to direct deposit the cash value. Waiting for confirmation that the policy is surrendered with some date to expect the cash value in my bank. If anything changes, I will let you know. :sharebeer
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Stinky »

welloiledinvestor wrote: Fri Apr 30, 2021 6:34 pm I wanted to give you guys some update. Thank you for supporting me and giving me your feedback. I really appreciate it. I reached out to agent through email. Agent wanted to talk and I said, I have made my decision and I want it to be over with. They have my information to direct deposit the cash value. Waiting for confirmation that the policy is surrendered with some date to expect the cash value in my bank. If anything changes, I will let you know. :sharebeer
Excellent!

Congratulations on making this move.
It's a GREAT day to be alive! - Travis Tritt
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welloiledinvestor
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

Stinky wrote: Fri Apr 30, 2021 6:36 pm
welloiledinvestor wrote: Fri Apr 30, 2021 6:34 pm I wanted to give you guys some update. Thank you for supporting me and giving me your feedback. I really appreciate it. I reached out to agent through email. Agent wanted to talk and I said, I have made my decision and I want it to be over with. They have my information to direct deposit the cash value. Waiting for confirmation that the policy is surrendered with some date to expect the cash value in my bank. If anything changes, I will let you know. :sharebeer
Excellent!

Congratulations on making this move.
Thank you very much for your feedback throughout! I feel really good about this. Not leaving any money on the table going forward. 8-)
Soon2BXProgrammer
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Soon2BXProgrammer »

tj wrote: Mon Apr 12, 2021 10:08 pm
Helios wrote: Mon Apr 12, 2021 10:04 pm It was a mixed whole life and term. Talk to your agent, they can reluctantly do a 1035 for you, or you can move to another plan.

None of these exchanges were difficult, just that the agents can lose money, and they can threaten surrender charges.
...then it wasn't a term policy.
Maybe it was term policy with a refund of premium rider?

https://www.kitces.com/blog/the-overloo ... insurance/
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welloiledinvestor
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by welloiledinvestor »

Soon2BXProgrammer wrote: Sat May 01, 2021 10:10 am
tj wrote: Mon Apr 12, 2021 10:08 pm
Helios wrote: Mon Apr 12, 2021 10:04 pm It was a mixed whole life and term. Talk to your agent, they can reluctantly do a 1035 for you, or you can move to another plan.

None of these exchanges were difficult, just that the agents can lose money, and they can threaten surrender charges.
...then it wasn't a term policy.
Maybe it was term policy with a refund of premium rider?

https://www.kitces.com/blog/the-overloo ... insurance/
Not sure about the rider part, but it seems to be like a temporary term-life that ends up being whole-life after 10-years. By the way, looks like a nice article. I will read it later.
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Stinky
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Stinky »

Soon2BXProgrammer wrote: Sat May 01, 2021 10:10 am
tj wrote: Mon Apr 12, 2021 10:08 pm
Helios wrote: Mon Apr 12, 2021 10:04 pm It was a mixed whole life and term. Talk to your agent, they can reluctantly do a 1035 for you, or you can move to another plan.

None of these exchanges were difficult, just that the agents can lose money, and they can threaten surrender charges.
...then it wasn't a term policy.
Maybe it was term policy with a refund of premium rider?

https://www.kitces.com/blog/the-overloo ... insurance/
Can a person do a 1035 exchange into a term life policy? If so, does it need to have an ROP rider?

That’s a question I can’t find answered on the internet. At least where I’ve looked.
It's a GREAT day to be alive! - Travis Tritt
Rex66
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Rex66 »

What they can do (although im sure agents wont want to do it), is 1035 into a "term" product that is based on a UL chassis that is guaranteed for lets say 20 years. You cant do it to a typical term though. As you may have seen there are some companies selling term on a UL chassis (doing it for reserve requirement reasons). The buyer shouldnt care though that its a UL as long as the rate is guaranteed for specific number of years. Now most arent really going to want to do this because if you actually happen to die early, you over paid. Since almost all the time we are talking about a loss on the original policy, you dont get much of a benefit any way.
Soon2BXProgrammer
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Soon2BXProgrammer »

Stinky wrote: Sat May 01, 2021 10:34 am
Soon2BXProgrammer wrote: Sat May 01, 2021 10:10 am
tj wrote: Mon Apr 12, 2021 10:08 pm
Helios wrote: Mon Apr 12, 2021 10:04 pm It was a mixed whole life and term. Talk to your agent, they can reluctantly do a 1035 for you, or you can move to another plan.

None of these exchanges were difficult, just that the agents can lose money, and they can threaten surrender charges.
...then it wasn't a term policy.
Maybe it was term policy with a refund of premium rider?

https://www.kitces.com/blog/the-overloo ... insurance/
Can a person do a 1035 exchange into a term life policy? If so, does it need to have an ROP rider?

That’s a question I can’t find answered on the internet. At least where I’ve looked.
I'm assuming your asking if you can 1035 a whole life policy into a term policy? I don't believe so, however a lot of perm life insurance policies have a "extended term" option in their contract language, which in some ways does something similar. You could ask the company for an in-force illustration of your current policy, and an example illustration if you opted for the "extended term" option if you have one.
Rex66
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Re: Thinking of dropping State Farm 10 Pay Life Insurance

Post by Rex66 »

those terms though are not competitive
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