MetLife Promise Whole Life Select 10

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
tototiti
Posts: 3
Joined: Mon Feb 13, 2017 11:46 pm

MetLife Promise Whole Life Select 10

Post by tototiti » Mon Feb 13, 2017 11:53 pm

Hi,

I fell for a nice speech from a Sales girl last year and purchased a MetLife Promise Whole Life Select 10.
I pay $20,000/year towards it. Now that i have more time to look at it I'm just wondering if that whole policy actually makes sense.

Sure I want my family to be protected if i die prematurely but that's a lot of money that i'm throwing there without getting what appears to be a good return at all. So far I've made only one payment so I'm considering cancelling it all together.

Thanking you in advance for taking the time to read me and looking forward to good advices!

User avatar
StevieG72
Posts: 851
Joined: Wed Feb 05, 2014 9:00 pm

Re: MetLife Promise Whole Life Select 10

Post by StevieG72 » Tue Feb 14, 2017 6:22 am

Cancel the policy, you have only made one payment so consider yourself lucky!

Buy term life to protect your family and invest the difference.

Salesperson will try to talk you out of canceling, they get a BIG commission on WL policies.

Stick to your guns and cancel.
Fools think their own way is right, but the wise listen to others.

DEZ1
Posts: 75
Joined: Fri Jul 10, 2015 2:00 pm

Re: MetLife Promise Whole Life Select 10

Post by DEZ1 » Tue Feb 14, 2017 10:03 am

I would not cancel. Before you bought, you should have thought about it and depending on your situation made a decision. Once you have invested 20k keep it going. Once your ten years are up you have some options. Broker makes his money on the first year, very little after that. Check out the white coat investor blog.

Novine
Posts: 1164
Joined: Mon Nov 17, 2008 9:07 pm

Re: MetLife Promise Whole Life Select 10

Post by Novine » Tue Feb 14, 2017 10:12 am

"Once you have invested 20k keep it going."

What? Since you've invested 20k, you might as well invest 200k? Sunk cost fallacy anyone?

User avatar
cinghiale
Posts: 1176
Joined: Wed Oct 17, 2007 4:37 pm

Re: MetLife Promise Whole Life Select 10

Post by cinghiale » Tue Feb 14, 2017 10:18 am

Incomplete information. Way too little here to be able to offer an opinion.

OP, how old are you? Is there a point at which this policy will be fully paid up? If yes, in how many years?

What benefits would be gained by keeping this policy? What does it offer, besides a life benefit? And, if you happened to die, how much would your family receive?

It may be that $20,000.00 is a "sunk cost." But that's a high cost to let sink without considering all the variables! You need to come back for a second posting, and add the needed detail.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell

Elbowman
Posts: 494
Joined: Tue Apr 03, 2012 2:25 pm

Re: MetLife Promise Whole Life Select 10

Post by Elbowman » Tue Feb 14, 2017 10:31 am

Yes, you should post more information. But once you do, we will almost certainly suggest you cancel the policy.

The main situation where you many actually need Whole Life (also known as Permanent Life) insurance is if you will still need life insurance after you retire (most people don't). An example of something that might cause this is if you have a disabled child who will need care their entire life.

User avatar
climber2020
Posts: 1107
Joined: Sun Mar 25, 2012 8:06 pm

Re: MetLife Promise Whole Life Select 10

Post by climber2020 » Tue Feb 14, 2017 11:06 am

DEZ1 wrote:Once you have invested 20k keep it going.
tototiti wrote: So far I've made only one payment so I'm considering cancelling it all together.
I don't know much about how the payments work, but it is typical to pay the entire year's premium in one big chunk? Or is the sunk cost at this point only a month's payment of $1667?

edge
Posts: 3335
Joined: Mon Feb 19, 2007 7:44 pm
Location: Great Falls VA

Re: MetLife Promise Whole Life Select 10

Post by edge » Tue Feb 14, 2017 11:20 am

I am not a proponent of whole life. However, it is not sunk cost in the way you are thinking. The value of further premiums/cash value investments is normally significantly better than the 'first 20k'.

Once you are in it, it may be worth it to keep going depending on the precise terms of your contract. While the upfront decision might have been poor.
Novine wrote:"Once you have invested 20k keep it going."

What? Since you've invested 20k, you might as well invest 200k? Sunk cost fallacy anyone?

inbox788
Posts: 5693
Joined: Thu Mar 15, 2012 5:24 pm

Re: MetLife Promise Whole Life Select 10

Post by inbox788 » Tue Feb 14, 2017 8:40 pm

Elbowman wrote:Yes, you should post more information. But once you do, we will almost certainly suggest you cancel the policy.

The main situation where you many actually need Whole Life (also known as Permanent Life) insurance is if you will still need life insurance after you retire (most people don't). An example of something that might cause this is if you have a disabled child who will need care their entire life.
I agree with the BTIR (buy term invest rest) approach, but I wasn't able to figure out an equivalent guaranteed policy if you wanted to leave behind say exactly $500k when you passed, whether it was 5 years or 50 years from now. Using BTIR, if you die before the 20 or 30 year term is up, you'll be better off with the life insurance as well as the extra invested. If you live longer than XX years, your investments will exceed the death benefit. But if you live between 20/30 years and XX, you will have a shortfall.

Many people say there are better ways to achieve things than whole life, but I haven't figured this particular aspect yet.

tototiti
Posts: 3
Joined: Mon Feb 13, 2017 11:46 pm

Re: MetLife Promise Whole Life Select 10

Post by tototiti » Tue Feb 14, 2017 8:54 pm

Hi,

First thank you all for reading my message.

To give a bit of background : I'm 36 years old my wife is 33 years old and we have a daughter who's almost 2.

Some details about the policy:
- 10 years
- Initial death benefit is $644,171.
- Cash value at year 10 : $193,251 guaranteed, midpoint scale : $202,995, projected scale : $213,213
- Cash value at year 20 : $267,331 guaranteed, midpoint scale : $306,931, projected scale : $352,220

A bit more information: we've made a very large home purchase in NY (way too much) and my monthly mortgage payment will be around $8k/month (purchasing a $2,500,000 apartment, borrowing $1,800,000). Investing in 401K for both my wife and myself, cost of nanny, paying school - which i did not not foresee to be that expensive - paying the mortgage... This yearly 20K could be used. But really I want to force myself to keep that policy if it makes sense somehow. Our yearly gross income is around 820K.

Hopefully that's enough information

PS : I wish i found that forum before signing that contract :)

ryman554
Posts: 1116
Joined: Sun Jan 12, 2014 9:44 pm

Re: MetLife Promise Whole Life Select 10

Post by ryman554 » Wed Feb 15, 2017 9:52 am

tototiti wrote:Hi,

First thank you all for reading my message.

To give a bit of background : I'm 36 years old my wife is 33 years old and we have a daughter who's almost 2.

Some details about the policy:
- 10 years
- Initial death benefit is $644,171.
- Cash value at year 10 : $193,251 guaranteed, midpoint scale : $202,995, projected scale : $213,213
- Cash value at year 20 : $267,331 guaranteed, midpoint scale : $306,931, projected scale : $352,220

A bit more information: we've made a very large home purchase in NY (way too much) and my monthly mortgage payment will be around $8k/month (purchasing a $2,500,000 apartment, borrowing $1,800,000). Investing in 401K for both my wife and myself, cost of nanny, paying school - which i did not not foresee to be that expensive - paying the mortgage... This yearly 20K could be used. But really I want to force myself to keep that policy if it makes sense somehow. Our yearly gross income is around 820K.

Hopefully that's enough information

PS : I wish i found that forum before signing that contract :)
Let me get this straight:

You are rich enough to borrow 1.8M to get a house AND afford all the extra stuff. You have a lot of income.

You are paying $20k a year (200k, not including present value of future money) to get a policy that will be worth.... $200k in 10 years. (lets be kind and say $210k, which is a 10k gain in 10 years). This value *goes away* upon death, and you are buying $650k of life insurance. Worst case, you die at year 9.9 and you lose all your cash value -- you life insurance is now "worth" a net of $450k.

1. I posit that 650k of life insurance is NOT NEARLY ENOUGH given your current income and projected expenses. You need more.
2. OK, at least you get life insurance "for free" for 10 years... as long as you never use it. Otherwise it costs you 20k/year. You can get term for that amount for << $400 a year. that's $8000 over the 20 years, You can then invest the remainder of the $192,000 and I bet you will do better than a $10k gain over the next ten years.

I bet if you invest $172k over the next 10 years you end up with more than $210 at year 10.

Get the cash, surrender the policy.

Elbowman
Posts: 494
Joined: Tue Apr 03, 2012 2:25 pm

Re: MetLife Promise Whole Life Select 10

Post by Elbowman » Wed Feb 15, 2017 12:56 pm

tototiti wrote:A bit more information: we've made a very large home purchase in NY (way too much) and my monthly mortgage payment will be around $8k/month (purchasing a $2,500,000 apartment, borrowing $1,800,000). Investing in 401K for both my wife and myself, cost of nanny, paying school - which i did not not foresee to be that expensive - paying the mortgage... This yearly 20K could be used. But really I want to force myself to keep that policy if it makes sense somehow. Our yearly gross income is around 820K.
This bit is important, more so than the Whole Life insurance. You should be able to save at least 20% of you income (~$160k, maybe $100k after taxes) which means the Whole life insurance should be a minor part of your savings (still, you shouldn't keep it, but that's beside the point). If you are not close to that then your spending is out of control, which will be a MUCH bigger problem for your financial well-being than the insurance.

inbox788
Posts: 5693
Joined: Thu Mar 15, 2012 5:24 pm

Re: MetLife Promise Whole Life Select 10

Post by inbox788 » Wed Feb 15, 2017 2:48 pm

tototiti wrote:Some details about the policy:
- 10 years
- Initial death benefit is $644,171.
- Cash value at year 10 : $193,251 guaranteed, midpoint scale : $202,995, projected scale : $213,213
- Cash value at year 20 : $267,331 guaranteed, midpoint scale : $306,931, projected scale : $352,220
Did you just sign up this year?

I assume you could get around $500k term policy for around $500/year. If you take $20,000 and get a 2.5% return, you can pay for the term policy.

Midpoint and projected are meaningless. They can change with the weather. Also, they've been very unrealistic, so go with guaranteed number only.

If I understand the policy correctly, this policy is fully paid up in 10 years, and you don't need to add a dime after that. Total payments is $20k/year for 10 years, so $200,000 total payments ever paid. You get nothing, but your heirs get $644k+ when you pass. How does the death benefit increase? Does it ever decrease? What do the guaranteed values look down the road?

If you're at year 10, going from $193k to $267k is about a 3% return, and you get the life insurance worth about $500/year, so decent if you compare it to buying bonds that return 3% on the investment side. Would you buy long term bonds that return 3%? Have a need to lockup $200k for that much cash in bonds? Does it change your thinking about your investment asset allocation?

The problem is that getting to year 10 is going to be very expensive. You are giving up use and return on up to $200k for 10 years (minus about $7k to get down to $193) to buy insurance that costs $500x10= $5k. A rough estimate of opportunity cost is $200k x 5 years x 5% returns = $50k!

It's just not worth $50k your passing up.

Morgan22
Posts: 50
Joined: Thu Oct 29, 2015 12:30 pm

Re: MetLife Promise Whole Life Select 10

Post by Morgan22 » Wed Feb 15, 2017 4:14 pm

Go to term4sale.com and shop there for a term policy. You'll probably save 19k a year if you drop the whole life and buy term.

User avatar
Frugal Al
Posts: 1698
Joined: Fri May 28, 2010 10:09 am

Re: MetLife Promise Whole Life Select 10

Post by Frugal Al » Thu Feb 16, 2017 4:07 am

It sounds like bit like lifestyle creep is driving up expenses faster than planned, impinging upon savings and insurance goals. With such a limited amount of info to go on it can be difficult to understand all the facts and circumstances which may not be obvious. What was the primary purpose of this policy? If this is the only life insurance policy you've got, you seem to be grossly underinsured. In which case I'd probably ditch it and the sales person.

The anticipated performance of the policy is underwhelming even at the projected non-guaranteed values. You need to reassess your life insurance needs. I suspect this policy was sold to you as a structured, forced, tax sheltered savings vehicle, based on your high tax situation and the comment that you want to "force" yourself to keep it if it makes sense. I don't think it does make sense, and it fails woefully at what should be its primary objective: insurance. Have you maximized all other tax deferral tools? Get the coverage you need with term insurance and embark on putting together an investment plan, if you don't already have one other than the 401k you mentioned. With a solid plan for investing, tax planning, and insurance, you won't fall prey to predatory sales tactics and sales girls with nice speeches. It's usually best not to commingle insurance and investments. There can sometimes be an exception for those with uber high net worth, are extremely risk averse, and have a diminishing marginal utility of wealth, but you're not there...yet.

Grt2bOutdoors
Posts: 19521
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: MetLife Promise Whole Life Select 10

Post by Grt2bOutdoors » Thu Feb 16, 2017 7:46 am

You are living in NYC, congratulations! Now the bad news, you will be hosed! For everything!!! Taxes, you are in the highest marginal brackets, you are subject to ACA, Medicare tax, food costs at the grocery store are much higher than elsewhere because you are carrying their overhead, property taxes - how much are you paying? If you make 820k gross, you are coming home with half or quite possibly less, yep, I can see you feeling the squeeze. You need to go over your budget with a FINE toothcomb. I am sure you could use that $20k, 20k is $40k grosd, that is about 5 percent of your income. Take a look at term4sale.com, you need at least $3 million in term life insurance, preferably $5 million, your net worth is low compared to lifestyle and costs. Hope you have a good disability policy to replace it in case of anything down the road. Good luck.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

tototiti
Posts: 3
Joined: Mon Feb 13, 2017 11:46 pm

Re: MetLife Promise Whole Life Select 10

Post by tototiti » Thu Feb 16, 2017 12:16 pm

Hi,

Thanks to everybody about the recommendations!
My gut feeling was to cancel the policy due to lack of return and you guys comforted me in my decision. Too bad I made one payment but i guess life is about learning from our mistakes. I will post another topic soon to ask for recommendations about investment and savings once my purchase is done.

Thanks again, really appreciate the help.

- C

Post Reply