Opinions on Wealth Protector Universal Life Insurance

[pb4uski]

[cross-posted with the two above...]

pb4uski, this is a backwards look at return-to-date, correct?

Shouldn't the continuation decision be based on a forward-looking calculation, treating the premiums already paid as a sunk cost to be ignored? I would think surrender value is much more relevant.....

Yes Harry, I was just looking at inception to date return assuming that the policy was an investment just to see what the investment attributes look like.

And I agree that the past is sunk and the future is most important to the decision to keep or surrender. The OP indicates that COIs for the most recent year are $1,360 and I suspect those will only increase as the OP ages and further reduce returns.

There seems to me no need for insurance for federal estate taxes as the OP's estate is way below the $5m and even if the OP & DW were to die today the state estate taxes would be less than $100k. On the other hand the OP has a very low withdrawal rate so in the future the estate will grow and with it the state estate tax risk unless the state further increases the exemption amount.

The OP could ask his agent for a policy illustration showing the projected future values after fees at various rates of return to get a sense of the future of the policy as an investment. I admit to wondering if the OP could/would be better off trading this VUL policy for a second to die term policy (or at some future point consider relocating to a state with no estate taxes).

 

[Gatordoc50]

Gatordoc; The premiums are variable in that one can pay any amount they want to. The qualifier is that if the invested funds don't support the insurance charges, the policy will lapse. The insurer has promoted the fact that one can pay for 15 years at the suggested rate, and under normal market conditions will no longer have to pay any premiums, as there will be enough of a balance to continue paying the cost of insurance. So after paying 15 years of premiums of $5,460, or $81,900 of your own money, you're done, if you want to be. I suppose one should run the numbers to see if one invested $5,460 each year without insurance, how long it would take with normal market conditions to reach a portfolio of $500000. But as someone pointed out, if you both die early, you've won under the insurance scenario.

Of course none of us want to win that way.

Normally, the "premium" due in these policies remains constant. In your case 5460.00 which will be due each year to keep the insurance in force. If that is the case then after year 15 you will have roughly 85k in your account to pay those premiums. You could do a firecalc to guesstimate how long your assets inside this policy will last paying the premium. It will most likely last you 15 to 20 years. After your account is depleted you will have to step back in and make the premium payment to keep the insurance in force. Regardless, it looks like this will be a good investment for your heirs depending on your longevity. I'd probably keep it as long as the death benefit and premiums are constant.

 

[brewer12345]

The insurer has promoted the fact that one can pay for 15 years at the suggested rate, and under normal market conditions will no longer have to pay any premiums, as there will be enough of a balance to continue paying the cost of insurance. So after paying 15 years of premiums of $5,460, or $81,900 of your own money, you're done, if you want to be.

Hahahahahahaahha!!! Good one. You do know that the life insurance industry hasbeen sued dozens of times for such claims/suggestions and the settlements easily total in the billions of dollars when it turned out that this happy scenario did not pan out?

 

[pb4uski]

Hahahahahahaahha!!! Good one. You do know that the life insurance industry hasbeen sued dozens of times for such claims/suggestions and the settlements easily total in the billions of dollars when it turned out that this happy scenario did not pan out?

That and the last 13 years have been far from "normal market conditions" so i suspect that it is unlikely that the policy could support itself for long. I hope I am wrong.