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Entries by maryjoirmen
Here we go again. Not sure about you, but I am tired of hearing myself talk about these horrible policies. However, there are so many of them out there they seem to find me, and each time I get all riled up and start seeing red. It is understandable that agents only know what they […]
If you have not looked at the bad policy #2 yet I suggest you go back and read that one. This one follows #2 because it is on the same insured and from the same agent/company.
The only difference here is this policy is 23 years old already and it even terminates faster than the last one! Yes, you have that right, by age 73 the insured has no death benefit left because the fees and charges are being taken from cash value to supplement the premium.
If you read the blog on “bad policy #2” you remember the insured is non-insurable and has no money to get another policy that will last until he passes. Which is most likely at age 84 because he is male.
Make sure your policy is right from the beginning so you are not caught in this same situation. Again, call or email me and I would be happy to take a look at what you have. That is what this insured did. I am ok with that, I was not able to write another policy for them but I did help them see and understand what they have.
The first “bad policy” from the Fiscalbridge library was a Variable Universal policy and here we are going to look at a Universal. I call these kinds of policies “cross-breeds” because there are a few differences but at the end of the day, they are not performing better than each other.
Again, I have removed the name of the company as I don’t feel the company is important. It’s the type of policy and how it’s being sold that is important. These policies can work if you fund them correctly and hope and pray your return is what they (the agent or company) say it will be.
What you are seeing here (sorry it’s a little small) is $1,801.04 a year premium. He has paid a premium on this policy for 16 years already and should have an established policy. Yet we look down to year 28 when the insured is 69 years old and see his cash value starts to decrease every year, even though he is paying his premium. Continuing to follow those numbers we see by age 80 his policy terminated due to no cash value. Unless of course, he wanted to pay unbelievably high premiums to keep it in place.
This is based on a 3.25% rate of return. That is not even that high of a ROR, yet the policy is not going to last.
This story does not end well. This insured is no longer insurable as he has an aneurysm by his heart. On top of that, he does not have enough money to start another whole life policy which means death benefit is very very important to his family. Unlike most people who call me and want cash value, these people wanted both. I can’t give them either!
Their agent did not look long term or they would have seen this themselves. This kind of stuff rips me apart. I can’t save the policy nor can I help them save the farm they are operating. The only thing I could tell them was he has to pass before 80 or there will be nothing there.
No one time their death and these policies are putting time frames on our lives.
Please watch what you are buying. If your agent is not looking long term you need to be. It is beyond me how agents don’t look at those dashes and show their client that the policy may terminate at that time. Look at your policy are there dashes or zero’s before the illustration stops?
If you have questions on your policies, whether variable universal or whole life, please call me or email them to me so I can take a look. If they are right I’ll tell you to keep it. I am not here looking to replace people’s policies, I am here looking to educate and be sure you have something when you were supposed to have it.
Over the years, I’ve accumulated illustrations and a handful of insurance policies from my clients, people who have attended the Secure Wealth Builders Conference, and others who end up in my office because they didn’t see the light at the end of the tunnel. The information in this post is meant to educate and create awareness for those looking for answers and those who want to make sure their insurance policy is set up to benefit them the most.
If you’ve read any of my books or blogs, you have heard me talk about fees and charges inside policies that are not whole life policies. Other permanent products have these and on most account agents are sharing this information with you.
Here is one of those charges: Cost of Insurance (COI) is the expense factor which is the amount the company adds to the cost of the policy to cover operating costs of selling insurance, investing the premiums, and paying claims.
Every company has these COI charges but how they are handled is not the same for every company. Mutual companies take these charges from your dividend before they give it to you. Meaning the dividend you get is after all these are paid, yet you still get a dividend! In a policy like you see below, that does not happen.
What you are looking at here is a variable universal policy with a non-mutual company. First things first, there are no dividends being given to policy owners so there is no place to get this money from beside you as the policy owner. Second, in these companies have recently gotten in trouble for astronomical increasing costs of COI’s. As you can see here, the COI charge was $3,662.39 and the projected amount for next year is $4,402.08. That is an increase of $740 in one year!
These COI’s are increasing rapidly with some companies because they have over projected the rates of return on these policies. The difference has to be made up somewhere and that is being passed off to you.
You can clearly see this insured has a yearly premium of $1,284.50 and his COI is MORE than his premium! What are they doing to cover the difference? They are taking money from his cash value to supplement.
Look at is cash value, there is only $3005.30 left, this policy will collapse on him the next year unless he pays in more than the premium due. His premium plus his cash value does not even cover the projected COI for next year.
Sadly, this policy was issued in 1983, it was 2015 when he brought this to me. He was sold this policy that he would have money for retirement and make great rates of return. He is now around 83 years old and he has NOTHING!
When I warn about these policies it is not so I can sell more insurance, it is so you as the consumer are educated enough to make the right decision. Whole life is not the same as these other permanent products. Whole life with a mutual company is not the same as whole life with a non-mutual company. Dividends and guarantees are important.
This story is just one that I’ve heard over my career.
If you see anything here that you have questions about or if it sounds familiar, please contact your agent.
Mary Jo Irmen’s interview Mary Jo explains the concept of arranging your finances to benefit your family through the generations, and how to create financial security for your farm. The interview is from The Angus Report, April 29, 2019. Watch the full episode here. Click here to get a deeper understanding of the concepts Mary […]
Next Big Recession On Its Way.
Have you been wondering when the next recession will hit?
You are like many others, we’ve all been watching the market as it’s been up and down. Don’t get too comfortable! Robert P. Murphy and Austrian Economist explain in the “When is the Recession Coming” article on page 10 there is a great indicator of why he feels late 2019 to 2020 will be the next big downturn.
If you look at the yield curve on page 13 you will see there are 2-3 big drops and then gains before the big crash each time this happens.
You will also see what the that the Feds have been paying banks to hold money since 2018 driving up the bank reserves. Banks were being paid more to hold money than to lend money.
Today that is not the case, banks are being charged 1.5% to lend money from the Feds making it harder for them to make money by then lending it to you. They can’t continue this, so instead of continually raising rates the Feds are collecting their IOU’s from the bank to keep rates down so makes can make money.
Yes, banks make money when interest rates are lower! (That’s for another blog.)
So again, manipulation of money is happening with inflation that will affect your bottom line. Read it for yourself.
If you want to protect your money from market ups and down, keep up with inflation and just plain sleep better at night knowing you are on the right track get yourself started today by purchasing either Farming Without the Bank or Wealth Without the Bank or Wall Street.