Whole Life Surrender & Pay Down Debt?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills

Re: Whole Life Surrender & Pay Down Debt?

Postby dhodson » Fri Feb 08, 2013 9:00 am

Bogleheads in general are receptive to real evidence. This person has none. Funny how he calls my stuff opinions but just puts his opinions up there without any evidence.

There is evidence for some insurance products such as SPIAs but even though whole life has been around for 200 years, i have yet to see one independent study showing it for good for much more than a permanent death benefit.

In this thread, the OP has been clear that he doesnt care about leaving money behind but the agent still tries to pretend whole life is a good fit.
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Re: Whole Life Surrender & Pay Down Debt?

Postby bluemarlin08 » Fri Feb 08, 2013 9:08 am

Whether it is LEAP or Living Balance Sheet, The Guardian alternative, I have never met anyone that initially bought the concept and was happy with the decision later. Now, I have met several that were so upset with the agent they brought a lawsuit. I know someone that worked in the office of an agent that pushed these concepts that had to quit because he couldn't take the phone calls from upset clients. These concepts are driven, IMO, by huge commissions.
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Re: Whole Life Surrender & Pay Down Debt?

Postby dhodson » Fri Feb 08, 2013 9:30 am

make sure you add me to your list
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Re: Whole Life Surrender & Pay Down Debt?

Postby BlckhwkPlt » Fri Feb 08, 2013 11:53 am

finanplan wrote:Thanks to all for the considerate replies, this has been helpful. Like most things finance-wise, I'm going to "stay the course" by continuing to pay down the $30k mortgage. We are going to free up some cash flow, and will hopefully pull in the payoff date to early 2013.


Just a question...have you shopped around for term?

My husband and I both have level term life insurance with $1MM policies with NWM for the same price you are paying for half of the coverage ($496/annually per policy for $1MM.) I got 'in' before my job changed or I'd be looking at $4K/year in premiums :D
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Re: Whole Life Surrender & Pay Down Debt?

Postby Shireman28 » Fri Feb 08, 2013 12:03 pm

OP,

I would surrender the whole life and pay down the debt.

If you don't like that, what is in your portfolio you mention? Is it tax advantaged or taxable?

Personally if it is all in taxable investments, subject to capital gains and dividend taxes, I would sell it too and pay down the mortgage.

No need to be leveraged. Get the mortgage paid off while maxing out retirement accounts and 529s, etc., and then start taxable investing down the road.
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Re: Whole Life Surrender & Pay Down Debt?

Postby finanplan » Fri Feb 08, 2013 7:25 pm

Portfolio is 100% tax advantaged. By going with a surrender, about 12k, roughly, would be taxed as income. I agree, that this product is not desirable for me, but at this point I'm going to stay the course and let the dividends pay the premiums. I find this be a frustrating outcome, but it is what it is.

In the medium term, I'm going to take a policy loan to pay off 70% of the mortgage. I'll be able to pay off this policy loan within 8 or so months, which saves a good amount of interest payments. I consider this a middle ground.
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Re: Whole Life Surrender & Pay Down Debt?

Postby dhodson » Fri Feb 08, 2013 7:47 pm

you are the right course in my view. you understand it was a mistake to purchase but need to make the most of the situation.

you should ask for in force illustrations yearly (which they must provide if you request) to track your progress.

dont fall for any sales pitches though
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Re: Whole Life Surrender & Pay Down Debt?

Postby finanplan » Fri Feb 08, 2013 8:24 pm

dhodson wrote:you are the right course in my view. you understand it was a mistake to purchase but need to make the most of the situation.

you should ask for in force illustrations yearly (which they must provide if you request) to track your progress.

dont fall for any sales pitches though

I'd love to surrender, but it just doesn't make sense, unfortunately. Live and learn. As soon as the second mortgage is dead and gone, I'll begin really plowing money into tax advantaged, more so than our current 34k/year, as well as taxable.
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