NWM In force illustrations - help translating

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Topic Author
chet96
Posts: 218
Joined: Fri Feb 21, 2020 8:14 am

NWM In force illustrations - help translating

Post by chet96 »

Hello Folks:

I' am hoping that someone can translate these old NWM policies.

Background: I am 47. My dad bought these 3 policies for me back in the 80's and 90's. I took over the payments and just kept rolling with it. I also have a NWM disability policy (not shown), that I may need some help on. Dad is a conservative investor, and likes his insurance (still alive). He looked at these policies as an investment. There is a history of type 1 diabetes in the family, and his concern was that I would possibly be uninsurable. (I was not in his shoes, and am not going to trash the decision - it came from a good place). I also purchased whole life policies for my kids - keeping the tradition alive. (I will trash my own decision, the choice to surrender those policies is pretty easy, but I will post that data as well for comedic effect if the group so desires.)

So, if I could impose, any group input here? At this point, I am pretty much pot committed to going down with the Titanic on these policies. It just irritates me that I have been paying (and Dad before me) for SO LONG with so little benefit. Currently dividends are set to purchase additional benefit (I believe that is the correct terminology). I am thinking of using the dividend to reduce premium and ride these out. I only want to know when these will carry themselves, and frankly, do not want to talk with the agent.

(This is not my only life insurance - I have group policies through work that I will likely replace with term policies as well).

Let me know if anyone needs more data. Have a great weekend.

My policies:

Code: Select all

$10,000 65 Life																
Annual Premium $103.80																
Policy Date 8/16/1980																
								Annual 		Cash Surr	Tot Prem	Cash Surrender Value		
Age		Cal		Insurance	Dividend	Premium		Increase	Outlay 2022	Tot		Guarantee
46		2020-21		11,889		69		N/A		N/A		N/A		4,089		4,019
47		2021-22		12,073		74		104		240		104		4,330		4,183
48		2022-23		12,265		80		104		251		208		4,582		4,350
49		2023-24		12,465		86		104		263		311		4,845		4,520
50		2024-25		12,674		92		104		275		415		5,120		4,693
51		2025-26		12,893		99		104		287		519		5,408		4,868
52		2026-27		13,122		107		104		300		623		5,709		5,047
53		2027-28		13,361		115		104		314		727		6,023		5,228
54		2028-29		13,610		123		104		328		830		6,352		5,411
55		2029-30		13,870		132		104		343		934		6,695		5,597
56		2030-31		14,141		141		104		358		1,038		7,054		5,786
57		2031-32		14,423		151		104		374		1,142		7,428		5,977
58		2032-33		14,717		161		104		390		1,246		7,819		6,170
59		2033-34		15,023		172		104		407		1,349		8,227		6,365
60		2034-35		15,341		183		104		424		1,453		8,651		6,562
61		2035-36		15,671		194		104		442		1,557		9,094		6,761
62		2036-37		16,013		206		104		460		1,661		9,554		6,963
63		2037-38		16,367		218		104		479		1,765		10,033		7,166
64		2038-39		16,733		230		104		497		1,868		10,531		7,372
65		2039-40		17,062		211		0		432		1,868		10,964		7,526
																
65		2038-39		16,733		230		104		497		1,868		10,531		7,372
70		2043-44		18,505		264		0		488		1,868		12,833		8,122
79		2052-53		22,524		396		0		629		1,868		17,921		9,319
																
																
$10,000 65 Life																
Annual Premium $113.80																
Policy Date 6/12/1987																
								Annual 		Cash Surr	Tot Prem	Cash Surrender Value		
Age		Cal		Insurance	Dividend	Premium		Increase	Outlay 2022	Tot		Guarantee
47		2021-22		12,296		70		N/A		N/A		N/A		4,018		3,947
48		2022-23		12,488		75		114		246		114		4,264		4,116
49		2023-24		12,688		80		114		258		228		4,522		4,289
50		2024-25		12,895		86		114		270		341		4,793		4,466
51		2025-26		13,110		92		114		282		455		5,075		4,646
52		2026-27		13,334		98		114		295		569		5,371		4,831
53		2027-28		13,568		106		114		309		683		5,681		5,018
54		2028-29		13,812		113		114		323		797		6,004		5,209
55		2029-30		14,066		122		114		338		910		6,342		5,403
56		2030-31		14,331		130		114		353		1,024		6,696		5,600
57		2031-32		14,607		139		114		369		1,138		7,065		5,801
58		2032-33		14,893		148		114		386		1,252		7,452		6,005
59		2033-34		15,189		157		114		403		1,366		7,855		6,212
60		2034-35		15,495		167		114		421		1,479		8,277		6,424
61		2035-36		15,811		177		114		439		1,593		8,716		6,638
62		2036-37		16,138		188		114		457		1,707		9,173		6,857
63		2037-38		16,477		199		114		477		1,821		9,650		7,078
64		2038-39		16,828		211		114		496		1,935		10,147		7,302
65		2039-40		17,138		191		0		424		1,935		10,572		7,470
66		2040-41		17,459		202		0		439		1,935		11,011		7,638
																
65		2038-39		16,828		211		114		496		1,935		10,147		7,302
70		2043-44		18,485		236		0		485		1,935		12,423		8,138
79		2052-53		22,336		390		0		636		1,935		17,537		9,508
																
																
$20,000 65 Life																
Annual Premium $252.60																
Policy Date 6/13/1996																
								Annual 		Cash Surr	Tot Prem	Cash Surrender Value		
Age		Cal		Insurance	Dividend	Premium		Increase	Outlay 2022	Tot		Guarantee															
47		2021-22		23,719		166		N/A		N/A		N/A		7,182		7,015
48		2022-23		24,169		176		253		530		253		7,713		7,365
49		2023-24		24,633		187		253		555		505		8,269		7,722
50		2024-25		25,110		198		253		581		758		8,850		8,088
51		2025-26		25,603		211		253		608		1,010		9,459		8,463
52		2026-27		26,113		225		253		636		1,263		10,095		8,845
53		2027-28		26,642		240		253		665		1,516		10,761		9,235
54		2028-29		27,191		256		253		696		1,768		11,458		9,631
55		2029-30		27,760		273		253		727		2,021		12,185		10,035
56		2030-31		28,350		291		253		761		2,273		12,946		10,446
57		2031-32		28,961		309		253		796		2,526		13,742		10,865
58		2032-33		29,591		327		253		831		2,779		14,574		11,292
59		2033-34		30,241		347		253		868		3,031		15,443		11,729
60		2034-35		30,911		366		253		907		3,284		16,350		12,173
61		2035-36		31,601		387		253		946		3,536		17,296		12,627
62		2036-37		32,313		409		253		987		3,789		18,284		13,089
63		2037-38		33,047		432		253		1,028		4,042		19,312		13,559
64		2038-39		33,804		456		253		1,071		4,294		20,384		14,038
65		2039-40		34,451		398		0		868		4,294		21,252		14,361
66		2040-41		35,123		423		0		900		4,294		22,152		14,683
																
65		2038-39		33,804		456		253		1,071		4,294		20,384		14,038
70		2043-44		37,290		501		0		1,004		4,294		25,061		15,646
79		2052-53		45,532		833		0		1,333		4,294		35,750		18,279
exodusNH
Posts: 10344
Joined: Wed Jan 06, 2021 7:21 pm

Re: NWM In force illustrations - help translating

Post by exodusNH »

chet96 wrote: Fri Jun 25, 2021 7:23 am Hello Folks:

I' am hoping that someone can translate these old NWM policies.

Background: I am 47. My dad bought these 3 policies for me back in the 80's and 90's. I took over the payments and just kept rolling with it. I also have a NWM disability policy (not shown), that I may need some help on. Dad is a conservative investor, and likes his insurance (still alive). He looked at these policies as an investment. There is a history of type 1 diabetes in the family, and his concern was that I would possibly be uninsurable. (I was not in his shoes, and am not going to trash the decision - it came from a good place). I also purchased whole life policies for my kids - keeping the tradition alive. (I will trash my own decision, the choice to surrender those policies is pretty easy, but I will post that data as well for comedic effect if the group so desires.)

So, if I could impose, any group input here? At this point, I am pretty much pot committed to going down with the Titanic on these policies. It just irritates me that I have been paying (and Dad before me) for SO LONG with so little benefit. Currently dividends are set to purchase additional benefit (I believe that is the correct terminology). I am thinking of using the dividend to reduce premium and ride these out. I only want to know when these will carry themselves, and frankly, do not want to talk with the agent.

(This is not my only life insurance - I have group policies through work that I will likely replace with term policies as well).

Let me know if anyone needs more data. Have a great weekend.

My policies:

Code: Select all

$10,000 65 Life																
Annual Premium $103.80																
Policy Date 8/16/1980																
								Annual 		Cash Surr	Tot Prem	Cash Surrender Value		
Age		Cal		Insurance	Dividend	Premium		Increase	Outlay 2022	Tot		Guarantee
46		2020-21		11,889		69		N/A		N/A		N/A		4,089		4,019
47		2021-22		12,073		74		104		240		104		4,330		4,183
You can repeat the exercise for each plan, but the basics are

Guaranteed year 2 - Guaranteed year 1 - premium = return on the investment.
Return on investment / guaranteed year 2 * 100 = rate of return

4183-4019-104 = 60
60 / 4019 = 1.49%

*Edit: The higher cash total value is an optimistic representation. The math is the same, but you can't know how often you're going to get that value unless you have prior copies of the in-force illustrations. The 1.49% is what they're guaranteeing you.

And you can see my policy analysis here: viewtopic.php?f=2&t=347533

Whole life polices are great for the sales people; and, with very few, specialized exceptions, terrible for the insured.

If you surrender the policies, you'll owe regular income tax on the increase in value. You should be able to log into the NWM site and see what the increase has been. In my example, with my cash value of ~64K, only about ~12K is a gain. The rest is my own money (return of capital.)

If you need life insurance and intend to surrender these policies, make sure you get term insurance before you cancel.
Last edited by exodusNH on Fri Jun 25, 2021 9:09 am, edited 1 time in total.
exodusNH
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Re: NWM In force illustrations - help translating

Post by exodusNH »

* delete weird duplicate (may have replied to myself)
Last edited by exodusNH on Fri Jun 25, 2021 9:08 am, edited 1 time in total.
Rex66
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Re: NWM In force illustrations - help translating

Post by Rex66 »

WL always performs on the very low side

These are going to perform horribly.

Low value policies always perform worse.

The total death benefit should be higher than original face value if you are correct about dividend choice

The death benefits are so low it’s a poor decision even for insurability.

Looks like around years 2026 and 2028 dividends could then pay full premium. Dividends are not guaranteed and have been going down so I’d add another year to those assumptions.

If you want to go down with ship then that’s up to you.
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Nate79
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Location: Delaware

Re: NWM In force illustrations - help translating

Post by Nate79 »

If you have sufficient term insurance in place already you should cancel this trash and invest per your asset allocation.
Topic Author
chet96
Posts: 218
Joined: Fri Feb 21, 2020 8:14 am

Re: NWM In force illustrations - help translating

Post by chet96 »

Rex66 wrote: Fri Jun 25, 2021 8:47 am WL always performs on the very low side

These are going to perform horribly.

Low value policies always perform worse.

The total death benefit should be higher than original face value if you are correct about dividend choice

The death benefits are so low it’s a poor decision even for insurability.

Looks like around years 2026 and 2028 dividends could then pay full premium. Dividends are not guaranteed and have been going down so I’d add another year to those assumptions.

If you want to go down with ship then that’s up to you.
Yeah - I should have clarified - when I was broke early in my work-life, I had the accounts set to reduce premium.
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Stinky
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Location: Sweet Home Alabama

Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Fri Jun 25, 2021 7:23 am At this point, I am pretty much pot committed to going down with the Titanic on these policies. It just irritates me that I have been paying (and Dad before me) for SO LONG with so little benefit. Currently dividends are set to purchase additional benefit (I believe that is the correct terminology). I am thinking of using the dividend to reduce premium and ride these out. I only want to know when these will carry themselves, and frankly, do not want to talk with the agent.
I disagree that you should be committed to "going down with the Titanic" on these policies. If you keep the policies, you'll have committed to continuing with a "fixed income investment" of the surrender value. There's nothing requiring you to keep the policies and keep paying the premium.

What's been paid has been paid. There's nothing you can do about it. All you can do is assess whether these policies make sense for you going forward.

For a going forward analysis -
Looking at the three illustrations collectively, for the policy year marked "2021-22", and looking at the "total cash surrender value" column (since the dividends for the most current policy year is highly likely to be paid):
--- The beginning of policy year surrender value is $15,530.
--- The end of policy year surrender value is $16,559.
--- So the increase in surrender value is $16,559 - $15,530, or $1,029.
--- The premium is $470.20.
--- So the excess of surrender value increase over premium paid is $1,029 - $470, or $559.
--- So the return on your beginning of year surrender value is $559 / $15,530, or 3.60%.

That is, you've got a $15,530 "fixed income investment" that will earn 3.60% this year, plus provide your beneficiaries with some life insurance if you die this year (highly unlikely).

On the good side of keeping it, that's a higher rate than you can make in most other fixed income investments at this time. On the bad side of keeping it, (a) whole life is a highly inflexible investment vehicle, (b) you might not want to have any fixed income investments at this time in your life, and (c) even if you have fixed income investments, having $15k in 3 whole life policies might be more trouble than it's worth if your investments are considerable.

It's entirely your call. Post back with questions.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Topic Author
chet96
Posts: 218
Joined: Fri Feb 21, 2020 8:14 am

Re: NWM In force illustrations - help translating

Post by chet96 »

Thanks so much for the input. I am not all that upset at a 3% return.

The Titanic comment was pretty much a joke. I have had these things so long - I am just used to blindly making the monthly payments.

Couple questions - assuming I make it to 65 - do they just distribute the cash value to me? (The info beyond 65 confused me somewhat).

Is there any situation where having whole life insurance on children under 10 makes sense? (I will likely surrender these 2 policies, but will post data if needed).

Can I post my disability policy for comments also?
Rex66
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Re: NWM In force illustrations - help translating

Post by Rex66 »

Pay that yearly

They charge you a finance fee for monthly and it’s high
Rex66
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Re: NWM In force illustrations - help translating

Post by Rex66 »

Near zero reason to keep kid policies
exodusNH
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Re: NWM In force illustrations - help translating

Post by exodusNH »

chet96 wrote: Fri Jun 25, 2021 12:09 pm Thanks so much for the input. I am not all that upset at a 3% return.

The Titanic comment was pretty much a joke. I have had these things so long - I am just used to blindly making the monthly payments.

Couple questions - assuming I make it to 65 - do they just distribute the cash value to me? (The info beyond 65 confused me somewhat).
Stinky will post the correct info, but my understanding is that the policy will be consider "paid up" at some point, which means you stop paying premiums but the policy is still in force.
chet96 wrote: Fri Jun 25, 2021 12:09 pm Is there any situation where having whole life insurance on children under 10 makes sense? (I will likely surrender these 2 policies, but will post data if needed).
Almost certainly not. For the first few years, the premiums are going to pay the salesperson's commission. Life insurance is NOT an investment. The only people who say otherwise are the ones that benefit from you buying it.

Take my example, $261/month since May of 2004. The cash value of my policy is ~$64K. When I cash it in, I will pay ordinary income tax rates on the gain, which is currently ~$12K.

If I had invested $261/month in an 80/20 portfolio, I would have $156,000. I'd have been paying taxes on dividends, some of which would have been at the capital gains tax rate. If I were to liquidate it, most of the proceeds would be at the capital gains rate.

Take whatever you're spending on those policies and put it into a 100% index fund. Then ignore it. Your children have 50-60 years for that to accumulate.
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Stinky
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Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Fri Jun 25, 2021 12:09 pm Thanks so much for the input. I am not all that upset at a 3% return.

The Titanic comment was pretty much a joke. I have had these things so long - I am just used to blindly making the monthly payments.

Couple questions - assuming I make it to 65 - do they just distribute the cash value to me? (The info beyond 65 confused me somewhat).

Is there any situation where having whole life insurance on children under 10 makes sense? (I will likely surrender these 2 policies, but will post data if needed).

Can I post my disability policy for comments also?
The title of the policies is “65 Life”. That implies to me that your policies are “life paid up at 65”. That is, you will pay no more premiums after age 65, but life
Insurance stays inforce until your death (or earlier surrender). There would be no cash disbursed at age 65 unless you requested it. You can check the policies to be sure.

I would not carry life insurance on children. Period.

I would change my premium payments from monthly to annual. You will save some money.

If you want input on your disability policy, I’d start a new thread.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Topic Author
chet96
Posts: 218
Joined: Fri Feb 21, 2020 8:14 am

Re: NWM In force illustrations - help translating

Post by chet96 »

Rex66 wrote: Fri Jun 25, 2021 12:26 pm Pay that yearly

They charge you a finance fee for monthly and it’s high
Good point - I just made this switch and was surprised at the cost.
secondcor521
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Re: NWM In force illustrations - help translating

Post by secondcor521 »

Aside from the investment and life insurance aspects of your question, you may want to familiarize yourself with the behavioral economics phrase "sunk cost fallacy", determine how it applies to these policies, and then see if you're making the same error in other areas of your financial life.
Topic Author
chet96
Posts: 218
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Re: NWM In force illustrations - help translating

Post by chet96 »

Stinky wrote: Fri Jun 25, 2021 12:39 pm
chet96 wrote: Fri Jun 25, 2021 12:09 pm Thanks so much for the input. I am not all that upset at a 3% return.

The Titanic comment was pretty much a joke. I have had these things so long - I am just used to blindly making the monthly payments.

Couple questions - assuming I make it to 65 - do they just distribute the cash value to me? (The info beyond 65 confused me somewhat).

Is there any situation where having whole life insurance on children under 10 makes sense? (I will likely surrender these 2 policies, but will post data if needed).

Can I post my disability policy for comments also?
The title of the policies is “65 Life”. That implies to me that your policies are “life paid up at 65”. That is, you will pay no more premiums after age 65, but life
Insurance stays inforce until your death (or earlier surrender). There would be no cash disbursed at age 65 unless you requested it. You can check the policies to be sure.

I would not carry life insurance on children. Period.

I would change my premium payments from monthly to annual. You will save some money.

If you want input on your disability policy, I’d start a new thread.
Thanks - my father sent me the policies, I will check.

Great info here folks - if you saw my NWM account screen - you would probably lose your mind. There are now policies from 3 generations of my family shown. My father transferred all his policies (on his life) to my account when he retired - so I am in triage mode here. (That is probably a separate thread).

When I first signed up for an online account in the mid 2000s - every option used to say call your agent. At least now you can see some info.

Appreciate you all taking the time to look and advise! I will start a separate thread for my disability policy.
Topic Author
chet96
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Re: NWM In force illustrations - help translating

Post by chet96 »

secondcor521 wrote: Fri Jun 25, 2021 12:45 pm Aside from the investment and life insurance aspects of your question, you may want to familiarize yourself with the behavioral economics phrase "sunk cost fallacy", determine how it applies to these policies, and then see if you're making the same error in other areas of your financial life.
Yeah - I take your point, I have a blind spot here for these, because it is a long held belief that was locked in at a very early age.

And not to push back - but surrendering these policies also has a tax cost - that I was not aware of - until I posted this thread. My kid's policies, not so much.
exodusNH
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Re: NWM In force illustrations - help translating

Post by exodusNH »

chet96 wrote: Fri Jun 25, 2021 1:26 pm
secondcor521 wrote: Fri Jun 25, 2021 12:45 pm Aside from the investment and life insurance aspects of your question, you may want to familiarize yourself with the behavioral economics phrase "sunk cost fallacy", determine how it applies to these policies, and then see if you're making the same error in other areas of your financial life.
Yeah - I take your point, I have a blind spot here for these, because it is a long held belief that was locked in at a very early age.

And not to push back - but surrendering these policies also has a tax cost - that I was not aware of - until I posted this thread. My kid's policies, not so much.
There is, but only on the gains, not the whole amount. You'll have to pay them eventually (unless you die.) Bring up your most recent statement. On the second page, you should see something like:

TAX INFORMATION
Accumulated Value: $62,000.00
Less Cost Basis: $50,000.00
Taxable Gain if Surrendered: $12,000.00

It's the $12,000 that you'll be taxed at whatever your income tax marginal rate is.

You've got a total cash value on those three policies of about $15,000. Assuming you have same gains as me (which is probably unlikely as you said you reduced premiums early on), your basis is around $12,000, meaning you'd looking at a taxable gain of only $3,000. Even if you're in the highest bracket, that's ~$1,000 in additional tax. Unless that ~$3K puts you over some threshold, it's probably not worth worrying about. Just set aside $1K when you get the check.
Topic Author
chet96
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Re: NWM In force illustrations - help translating

Post by chet96 »

exodusNH wrote: Fri Jun 25, 2021 2:04 pm
chet96 wrote: Fri Jun 25, 2021 1:26 pm
secondcor521 wrote: Fri Jun 25, 2021 12:45 pm Aside from the investment and life insurance aspects of your question, you may want to familiarize yourself with the behavioral economics phrase "sunk cost fallacy", determine how it applies to these policies, and then see if you're making the same error in other areas of your financial life.
Yeah - I take your point, I have a blind spot here for these, because it is a long held belief that was locked in at a very early age.

And not to push back - but surrendering these policies also has a tax cost - that I was not aware of - until I posted this thread. My kid's policies, not so much.
There is, but only on the gains, not the whole amount. You'll have to pay them eventually (unless you die.) Bring up your most recent statement. On the second page, you should see something like:

TAX INFORMATION
Accumulated Value: $62,000.00
Less Cost Basis: $50,000.00
Taxable Gain if Surrendered: $12,000.00

It's the $12,000 that you'll be taxed at whatever your income tax marginal rate is.

You've got a total cash value on those three policies of about $15,000. Assuming you have same gains as me (which is probably unlikely as you said you reduced premiums early on), your basis is around $12,000, meaning you'd looking at a taxable gain of only $3,000. Even if you're in the highest bracket, that's ~$1,000 in additional tax. Unless that ~$3K puts you over some threshold, it's probably not worth worrying about. Just set aside $1K when you get the check.
Thanks! Really appreciate it. I will take a look. I saw that information before, but was not sure what it was telling me.

Did you decide to surrender your policies?
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Re: NWM In force illustrations - help translating

Post by exodusNH »

chet96 wrote: Fri Jun 25, 2021 3:15 pm
exodusNH wrote: Fri Jun 25, 2021 2:04 pm
chet96 wrote: Fri Jun 25, 2021 1:26 pm
secondcor521 wrote: Fri Jun 25, 2021 12:45 pm Aside from the investment and life insurance aspects of your question, you may want to familiarize yourself with the behavioral economics phrase "sunk cost fallacy", determine how it applies to these policies, and then see if you're making the same error in other areas of your financial life.
Yeah - I take your point, I have a blind spot here for these, because it is a long held belief that was locked in at a very early age.

And not to push back - but surrendering these policies also has a tax cost - that I was not aware of - until I posted this thread. My kid's policies, not so much.
There is, but only on the gains, not the whole amount. You'll have to pay them eventually (unless you die.) Bring up your most recent statement. On the second page, you should see something like:

TAX INFORMATION
Accumulated Value: $62,000.00
Less Cost Basis: $50,000.00
Taxable Gain if Surrendered: $12,000.00

It's the $12,000 that you'll be taxed at whatever your income tax marginal rate is.

You've got a total cash value on those three policies of about $15,000. Assuming you have same gains as me (which is probably unlikely as you said you reduced premiums early on), your basis is around $12,000, meaning you'd looking at a taxable gain of only $3,000. Even if you're in the highest bracket, that's ~$1,000 in additional tax. Unless that ~$3K puts you over some threshold, it's probably not worth worrying about. Just set aside $1K when you get the check.
Thanks! Really appreciate it. I will take a look. I saw that information before, but was not sure what it was telling me.

Did you decide to surrender your policies?
I haven't yet. Last year's return was just over 4%, which is better than my bond funds are doing. I consider it to be part of my fixed income allocation, where it makes up about 1/3rd of my bonds. I obviously can't rebalance with it, but the 2/3rd of actual bonds in my 401K are enough for that. It lets me take on more equities in my 401K and 100% equities in my taxable, putting me right about at my target of 80/20.

I wouldn't buy it again and counsel anyone who asks to avoid it, but at this point, it's a decent fixed-income investment. Once I straighten out my 2021 taxes and can see how much headroom I have between brackets (to avoid jumping due to the $12K of additional income), I may cash it out this year or next.

The same joker who sold me this plan also has me invested in a taxable American Funds account. I've got some substantial gains there, too, and want to start rolling out of those. (At least I don't have an AUM fee and am in "A" class shares whose ER aren't terrible if you forget about the front-end load.) I did cash out the bonds that were in the fund to buy I bonds.
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Re: NWM In force illustrations - help translating

Post by chet96 »

exodusNH wrote: Fri Jun 25, 2021 2:04 pm

There is, but only on the gains, not the whole amount. You'll have to pay them eventually (unless you die.) Bring up your most recent statement. On the second page, you should see something like:

TAX INFORMATION
Accumulated Value: $62,000.00
Less Cost Basis: $50,000.00
Taxable Gain if Surrendered: $12,000.00
I think I know the answer, but if accumulated value is below the cost basis - I don't get to book an income loss do I? (My kid's policies are only about 7 years old). I might post the data in a new thread.
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Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Fri Jun 25, 2021 7:33 pm I think I know the answer, but if accumulated value is below the cost basis - I don't get to book an income loss do I? (My kid's policies are only about 7 years old). I might post the data in a new thread.
Sorry, but you can’t take a tax deduction for a “loss” on a life insurance policy.

If your children’s policies are just 7 years old, it’s likely that the annual “return” on the cash value for the current policy year is very nominal, if it’s even positive.

I expect that you’ll receive zero support from the folks on this Board for retaining those policies.

My suggestion would be to surrender the children’s policies, and use the surrender value and any future planned premiums to bolster their college savings.
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Re: NWM In force illustrations - help translating

Post by exodusNH »

chet96 wrote: Fri Jun 25, 2021 7:33 pm
exodusNH wrote: Fri Jun 25, 2021 2:04 pm

There is, but only on the gains, not the whole amount. You'll have to pay them eventually (unless you die.) Bring up your most recent statement. On the second page, you should see something like:

TAX INFORMATION
Accumulated Value: $62,000.00
Less Cost Basis: $50,000.00
Taxable Gain if Surrendered: $12,000.00
I think I know the answer, but if accumulated value is below the cost basis - I don't get to book an income loss do I? (My kid's policies are only about 7 years old). I might post the data in a new thread.
As Stinky said, no. If you keep the policies, you're just throwing good money after bad.

Life insurance is for people with dependents; it is not an investment any more than your car or homeowner's insurance. Your children do not need this. Put that money in an actual brokerage account (or some sort of tax-advantaged education account) with real investments.

Remember, in the time it took my whole life policy to accumulate $64,000 of value, I could have had $156,000 by investing the exact same amount of money in an 80/20 portfolio.
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Re: NWM In force illustrations - help translating

Post by chet96 »

Thanks folks - I really do appreciate the thought and analysis put into your replies.

Insurance is needlessly complex, and I am trying to untangle a lot of stuff I do not fully understand. So I the comments have been really helpful.

The kids policies are an easy choice to surrender. I am still on the fence with mine. I will post the disability policy info separately.

Next I need to look at my dad's policies. (He is the insured, but they were transferred to my account through some shenanigans). Because he lives in a different state, I have to contact a different agent. All are covered by dividends, except for one. It looks like he was sold a 90 life policy at some point, and something else with an acronym that makes no sense, ooohh boy.

We tend to live a long time - but 90 life is just a product that should not exist. Wish me luck. If I could, I would buy all of you beers.
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Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Sat Jun 26, 2021 7:03 am Thanks folks - I really do appreciate the thought and analysis put into your replies.

Insurance is needlessly complex, and I am trying to untangle a lot of stuff I do not fully understand. So I the comments have been really helpful.

The kids policies are an easy choice to surrender. I am still on the fence with mine. I will post the disability policy info separately.

Next I need to look at my dad's policies. (He is the insured, but they were transferred to my account through some shenanigans). Because he lives in a different state, I have to contact a different agent. All are covered by dividends, except for one. It looks like he was sold a 90 life policy at some point, and something else with an acronym that makes no sense, ooohh boy.

We tend to live a long time - but 90 life is just a product that should not exist. Wish me luck. If I could, I would buy all of you beers.
Yes, some forms of insurance, including whole life, are quite complex. I worked in a senior financial position in a major life insurance company for my entire career, so I understand it better than most folks, but I think that a large proportion of the population is hopelessly confused by insurance sales people.

On your dad's policies - it is quite possible that those will be worth keeping, both as a "fixed income" asset and for the death benefit. If they're pretty old policies from NWML, it's likely that their annual "return" is somewhere in the 3-5% range. Additionally, if he were to surrender the policy, he would pay taxes on the "gain", as described upthread, but when benefits are paid out as a death claim, there is no tax. So there could be a tax reason to consider keeping the policy.

Finally, you should be able to get an inforce illustration directly from the company, so you shouldn't need to go back through the agent in another state.

Best to you.
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Re: NWM disability policy - comments requested

Post by Rex66 »

Read the articles at whitecoatinvestor.com

Just FYI 60% is about all u can get via one policy and I wouldn’t personally spend the money to go higher.
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Re: NWM In force illustrations - help translating

Post by chet96 »

Stinky wrote: Sat Jun 26, 2021 8:09 am
chet96 wrote: Sat Jun 26, 2021 7:03 am Thanks folks - I really do appreciate the thought and analysis put into your replies.

Insurance is needlessly complex, and I am trying to untangle a lot of stuff I do not fully understand. So I the comments have been really helpful.

The kids policies are an easy choice to surrender. I am still on the fence with mine. I will post the disability policy info separately.

Next I need to look at my dad's policies. (He is the insured, but they were transferred to my account through some shenanigans). Because he lives in a different state, I have to contact a different agent. All are covered by dividends, except for one. It looks like he was sold a 90 life policy at some point, and something else with an acronym that makes no sense, ooohh boy.

We tend to live a long time - but 90 life is just a product that should not exist. Wish me luck. If I could, I would buy all of you beers.
Yes, some forms of insurance, including whole life, are quite complex. I worked in a senior financial position in a major life insurance company for my entire career, so I understand it better than most folks, but I think that a large proportion of the population is hopelessly confused by insurance sales people.

On your dad's policies - it is quite possible that those will be worth keeping, both as a "fixed income" asset and for the death benefit. If they're pretty old policies from NWML, it's likely that their annual "return" is somewhere in the 3-5% range. Additionally, if he were to surrender the policy, he would pay taxes on the "gain", as described upthread, but when benefits are paid out as a death claim, there is no tax. So there could be a tax reason to consider keeping the policy.

Finally, you should be able to get an inforce illustration directly from the company, so you shouldn't need to go back through the agent in another state.

Best to you.
Thanks Stinky. I'm going to leave his alone. All except for one are covering themselves via dividend. He has one that is about $60 year that I want to understand better, as it is different that the others. It also appears to have the largest gain, so it would not make sense to surrender.

I was not aware the company could provide an inforce illustration. I have always been funneled back to the agent.

Interesting industry for sure. Your posts here are a real service to the group.
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Re: NWM In force illustrations - help translating

Post by Rex66 »

They will try to funnel u

Just say send the illustration or I’m contacting the state insurance commissioner. It’s worked for me many times.
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Re: NWM In force illustrations - help translating

Post by LadyGeek »

chet96 - In order to provide appropriate advice, it's best to keep all the info in one spot. I merged your update back into the original thread.

(Thanks to the member who reported the post and provided a link to this thread.)


Update: See below.
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Re: NWM In force illustrations - help translating

Post by White Coat Investor »

LadyGeek wrote: Sat Jun 26, 2021 12:06 pm chet96 - In order to provide appropriate advice, it's best to keep all the info in one spot. I merged your update back into the original thread.

(Thanks to the member who reported the post and provided a link to this thread.)
Not sure the merge was super helpful. Yes, it's the same OP, but it's two very different discussions that have now been merged (whole life and disability insurance).
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Re: NWM In force illustrations - help translating

Post by Stinky »

LadyGeek wrote: Sat Jun 26, 2021 12:06 pm chet96 - In order to provide appropriate advice, it's best to keep all the info in one spot. I merged your update back into the original thread.

(Thanks to the member who reported the post and provided a link to this thread.)
I agree with WCI.

At the very least, the thread title should be edited to include a reference to disability income.
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Re: NWM In force illustrations - help translating

Post by Rex66 »

Should be separate posts
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Re: NWM In force illustrations - help translating

Post by LadyGeek »

^^^ Sorry about that. My mistake. It's back to a separate thread: NWM disability policy - comments requested
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Re: NWM In force illustrations - help translating

Post by Rex66 »

Thx for doing that
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Re: NWM In force illustrations - help translating

Post by afan »

Help me understand why it matters whether you get the in-force illustration from the insurance company directly or through an agent. In the case of NWML, the agents are employees of the company.
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Re: NWM In force illustrations - help translating

Post by Stinky »

afan wrote: Sat Jun 26, 2021 6:02 pm Help me understand why it matters whether you get the in-force illustration from the insurance company directly or through an agent. In the case of NWML, the agents are employees of the company.
It doesn’t make any difference, since both agents and home office use the same illustration software.

However, it might be easier to get the illustration from the home office, especially if the original agent has retired or is in a different city.

Companies, including NWML, attempt to classify their agents as independent contractors rather than employees. See the following link:

https://www.insurereinsure.com/2019/05/ ... -employee/
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Re: NWM In force illustrations - help translating

Post by chet96 »

jeez - 5 minute phone call for the in-force analysis versus 3 emails and a 4 week wait using the agent.

unreal.
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Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Mon Jun 28, 2021 12:26 pm jeez - 5 minute phone call for the in-force analysis versus 3 emails and a 4 week wait using the agent.

unreal.
Maybe the agent was out prospecting for new customers targets? :twisted:
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Re: NWM In force illustrations - help translating

Post by chet96 »

yeah - he is a friend of friend, and seems like a nice enough guy. but, I am not interested in the additional disability insurance he wants to sell me now. at least he isn't trying to sell me investments I guess.

I almost bought term insurance from him when I bought the kid's policies. due to a paperwork glitch with my doctor, the transaction didn't go through. (I got fired up because they wanted me to chase paperwork to satisfy their underwriting - so I shut it down). It really is better to be lucky than good.
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Re: NWM In force illustrations - help translating

Post by Rex66 »

They have higher price term and inferior (non true occupations) disability

Better to go elsewhere
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Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Mon Jun 28, 2021 1:24 pm
I almost bought term insurance from him when I bought the kid's policies. due to a paperwork glitch with my doctor, the transaction didn't go through.
I am definitely a big advocate for level term life insurance from a competitive company. NWML is NOT that company. Their term life is expensive.

If you do look for term, I’d advise zander.com or term4sale.com. Much better selection of products, much better prices.
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Re: NWM In force illustrations - help translating

Post by chet96 »

Stinky wrote: Mon Jun 28, 2021 3:22 pm
chet96 wrote: Mon Jun 28, 2021 1:24 pm
I almost bought term insurance from him when I bought the kid's policies. due to a paperwork glitch with my doctor, the transaction didn't go through.
I am definitely a big advocate for level term life insurance from a competitive company. NWML is NOT that company. Their term life is expensive.

If you do look for term, I’d advise zander.com or term4sale.com. Much better selection of products, much better prices.
Perfect - that was my next question. I'm pretty sure I am now overpaying for my group policy at work.
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Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Mon Jun 28, 2021 7:07 pm I'm pretty sure I am now overpaying for my group policy at work.
There are a lot of reasons to have your primary life insurance coverage provided through individual policies rather than through your employer.

Presuming that you’re in reasonably good health, level term is likely cheaper than group life. The rates for level term are guaranteed to remain level for the term period, and will almost certainly be cheaper over the whole policy period than group life, whose rates often go up as you age.

Also, your group life ends if you leave your employer, with your only option for continuing coverage to “convert” your group life to an extremely expensive permanent life product.

When I was working, I accepted the “free” group life provided by my employer, which was $50k. I declined the excess group life, and bought individual policy level term insurance to cover my needs.

I’d recommend that you do the same.
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Re: NWM In force illustrations - help translating

Post by afan »

If you buy term and stay healthy, it may be worthwhile to shop again in a few years. Throughout the life insurance part of my life, I found that a new policy, even when a few years older, was cheaper than what I had. I assumed this was a combination of longer lives leading to lower rates overall and the fact that I had just passed medical underwriting. It is one reason I was less enthused about level term. You always pay higher rates than annual term in the early years in order to pay lower rates in the later years. But if you bail on the policy after a few years, you never get to those later years in your level policy.
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Re: NWM In force illustrations - help translating

Post by tj »

afan wrote: Mon Jun 28, 2021 9:14 pm If you buy term and stay healthy, it may be worthwhile to shop again in a few years. Throughout the life insurance part of my life, I found that a new policy, even when a few years older, was cheaper than what I had. I assumed this was a combination of longer lives leading to lower rates overall and the fact that I had just passed medical underwriting. It is one reason I was less enthused about level term. You always pay higher rates than annual term in the early years in order to pay lower rates in the later years. But if you bail on the policy after a few years, you never get to those later years in your level policy.
I replaced a 30 year policy with a 25 year policy with same benefit, saved $100/year. Maybe I'll try again in a couple years for a 20 year policy if I'm still healthy. We'll see what happens.
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Re: NWM In force illustrations - help translating

Post by chet96 »

Thanks all.

I’m planning to shop my local independent as well in addition to looking online.

Should I try for 25 year or 20? (72 or 67). I plan to retire as soon as I can, but life happens
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Re: NWM In force illustrations - help translating

Post by Rex66 »

I’d do the 20

It’s very difficult to game the system to buy term such that you “win”. That extra 5 will add a lot of cost.
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Re: NWM In force illustrations - help translating

Post by Stinky »

chet96 wrote: Mon Jun 28, 2021 11:51 pm Should I try for 25 year or 20? (72 or 67). I plan to retire as soon as I can, but life happens
Whether to go 20 or 25 is a question only you can answer, based on your personal situation.

A couple of thoughts. First, you’ll find a greater selection of products at 20 years than at 25. Second, most folks do not have dependent children as they get into their late 60s, and have their retirement financial plans pretty well in place by that time. Both of those considerations would suggest toward a 20 year policy. But, as I said above, only you can decide that.
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Re: NWM In force illustrations - help translating

Post by Kelly »

Question for Stinky: what do you think of placing the policies on reduced paid up status?
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Re: NWM In force illustrations - help translating

Post by Stinky »

Kelly wrote: Tue Jun 29, 2021 7:25 am Question for Stinky: what do you think of placing the policies on reduced paid up status?
I’ll describe what reduced paid up (RPU) is, and then give my thoughts.

RPU status is available to any whole life policy that has a positive surrender value. At the policy owners direction, RPU status allows the policyholder to cease future premium payments in exchange for reducing the amount of insurance to whatever the surrender value will fund. Depending on the age of the insured, a $10k surrender value might fund somewhere between a $15k to $25k death benefit.

Policies on RPU status typically continue to receive dividends at a reduced level. The annual “return” on the surrender value should be similar to what it was when the policy was in a premium paying status - likely 3% to 5%.

My thoughts on RPU are much the same as on an older whole life policy. It can represent a “fixed income” asset in someone’s portfolio. It should get a return that is attractive in today’s environment, but it is very inflexible. The only realistic way to access the surrender value is to terminate the policy. Also, money can’t be added to the “investment”.

Post back if you have questions. If you would like, you can private message me.
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Re: NWM In force illustrations - help translating

Post by chet96 »

Stinky wrote: Tue Jun 29, 2021 6:39 am
chet96 wrote: Mon Jun 28, 2021 11:51 pm Should I try for 25 year or 20? (72 or 67). I plan to retire as soon as I can, but life happens
Whether to go 20 or 25 is a question only you can answer, based on your personal situation.

A couple of thoughts. First, you’ll find a greater selection of products at 20 years than at 25. Second, most folks do not have dependent children as they get into their late 60s, and have their retirement financial plans pretty well in place by that time. Both of those considerations would suggest toward a 20 year policy. But, as I said above, only you can decide that.
Makes sense - thanks.
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