LSW/National Life Group for retirement

[orbit2u]

Hello All,

I'm a married 36 yr old with 2 teenage parasites I mean kids. We own a small business and I landlord 15 properties. I'm also embarassed to say I've been paying $500 a month to this universal life/retirement plan for about 1.5yrs. Our advisor sold it to us under what he called an "executive retirement plan" for business owners. I thought I had done enough research on the company to justify us starting a plan but after more research I'm beginning to wonder about our decision. The policy states its a "Equity-Indexed Flexible Premium Adjustable Benefit Life Insurance" plan. There is a surrender charge that goes down every year for 10 years. I'm under the impression that this is just a Equity Index Annuity product and the research i've done on this product doesn't make me feel very comfortable about sticking to it. My question would be should I use this vehicle for our retirement or cut my loses now and start over? I would greatly appreciate your input on this company/product and any advice that may be helpful for us right now. I feel really stupid about just getting involved with this w/o obviously doing enough research. Thanks for all of your help in advanced.

 

[brewer12345]

What you have is an equity-indexed universal life policy. This is probably even worse than an equity indexed annuity.

Do you have any need for the death benefit coverage from this policy?

 

[orbit2u]

Well we told our agent that we have a Matrix Direct term policy in the amount of 300K. Is that the same?

 

[orbit2u]

Are you referring to documented evidence that this is worse or is it your opinion? If so, I'm thinking I should cut my loses and move on. The surrender fee at this point is pretty much all I have paid in. Thanks for the input.

 

[Sarah in SC]

What you have is an equity-indexed universal life policy. This is probably even worse than an equity indexed annuity.

Do you have any need for the death benefit coverage from this policy?

Agree.
If you have term equivalent of the death benefit, no reason to keep.

 

[pb4uski]

Take a breath.

Sounds like an equity indexed UL policy. Like brewer asked, a key question is whether you need the insurance benefits that the policy provides.

If you do, you could stop putting money into it and the insurance will continue until there is insufficient account value to pay the monthly cost of insurance and administrative charges.

If you don't need the coverage, you MAY be able to take penalty free partial withdrawals and get more recovery than surrendering.

How has the policy done in the 1.5 years you have owned it? How does the account value compare to the premiums you have paid?

 

[orbit2u]

From what I have been told through LSW my first 8 payments were to buildup a portion of my account then it started to work for me?? I've put in approx.9k and she told me I have a $5500 cash value of which 10% is invested in fixed term strategy 4.75% gain, then 15% invested in point to point strategy 0% gain, 75% invested in point to average 0% gain. Am I understanding this wrong? Why have I put in 9K and only have $5500??

 

[73ss454]

I don't know much about these products but I'd guess the missing money is her commissions. Just a hunch though, heh.

 

[pb4uski]

I was thinking the same thing but I wouldn't think that the sales load, COIs and expense charges would eat up ALL the premium the first 8 months.

orbit2u, I think your best course is to contact the agent who sold the policy to you and ask them to explain why LSW is telling you that your balance is only $5,500 when you have paid in $9,000. While I'm not familiar with that specific product, it doesn't sound right to me.

 

[brewer12345]

Are you referring to documented evidence that this is worse or is it your opinion? If so, I'm thinking I should cut my loses and move on. The surrender fee at this point is pretty much all I have paid in. Thanks for the input.

It is my opinion. However, its hard to avoid that conclusion if your circumstances are as they appear.

If this were an equity indexed annuity, I would shake my head and snicker but probably tell you to keep what you have until the surrender charge went to zero. Since this is an EIUL policy, you need to determine whether you have any need for the death benefit coverage the policy provides. If you have no need for the mortality coverage, then you have been sold a grossly inappropriate insurance product that is ridiculously expensive as an investment vehicle.

 

[donheff]

Don't let this bum you out. A lot of us made bad investments at one time or another. Hopefully, once burned twice learned. After you sort this one out. Post more about your circumstances and you can get good advice here. But, as with anything, buyer beware. Take your time and be sure you understand what you are doing before you take a leap.

 

[Snowx800]

I bought a product like this from New York life. 2 years ago was told this is where all business owners put there money. Mine was 500 a month and after about a year put 6000 in had 2000 value. I dropped it and it was the best thing I ever did. Made sales person mad but I felt great now.

 

[birdie]

I've been in the insurance business for 35 years and I don't know what you bought , and it appears you may not know either. I suggest you contact the local manager for National Life. They are a fine company and will want to satisfy you. If you thought you bought an annuity for retirement income but were sold a universal life insurance policy..... Well let me just say "that is not good". In fact, totally unacceptable. Life insurance is a fantastic product, like nothing else in the whole world.... When it is sold correctly. However your story saddens me if you bought life insurance but didn't know you did. Good luck.... And make that call.

 

[2B]

From what I have been told through LSW my first 8 payments were to buildup a portion of my account then it started to work for me?? I've put in approx.9k and she told me I have a $5500 cash value of which 10% is invested in fixed term strategy 4.75% gain, then 15% invested in point to point strategy 0% gain, 75% invested in point to average 0% gain. Am I understanding this wrong? Why have I put in 9K and only have $5500??

I'll join the guessing game. I suspect you have a Universal Life Policy invested in index annuities. Unfortunately, you are probably paying outrageous fees on those index funds, have an add on insurance fee and, if it has a life insurance component, it costs much more than an equivalent term policy.

I like many others here owned a similar product. Unless you need the insurance it has (if any), I recommend cancelling. If you need insurance, get a level term policy and then cancel. I suspect the fees you are paying make waiting for the redemption penalty to go away a money losing proposition. I agree it's worth finding out the details before you do anything.

Your agent made a tidy commission on the sale and she'll continue to get a cut of your contributions for many more years. She has a big incentive to say whatever it takes to keep you sending in money every month. When I was trying to cash in a deferred annuity my father bought before he died, the agent dodged our calls and "forgot" to send the redemption paperwork for months. I ended up talking to her assistant once when the agent was out of the building. She actually sent me the forms. I hope she got another job soon because I'm sure the agent was really pissed.

 

[emailfc]

LSW/national life LSW flex life

I have an LSW that I contribute to every month. anybody ahead of me (knowledge, research) what I need to ask'em to clarify what they tell me or performance, etc?

 

[Sarah in SC]

Brewer might be able to help if you share the details, but it is out of my JD to evaluate these things.
Good luck!

 

[CaliforniaMan]

Google sent me to this page, seems applicable:
LSW/National Life Group for retirement?? | Financial Questions and Answers | BrightScope
Edward Smith's comment is interesting, saying usually term life and Roth are better strategies, his ending comment: "Please do your retirement planning with a Registered Investment Advisor and not a life insurance salesman. I don’t mean to sound so rude but this is a subject that I am passionate about. I met some good people in the insurance industry that I worked with for years but I differ from them now quite a bit when it comes to my beliefs about the role of life insurance in the over all financial plan. Good luck."