advise for 24 y/o who just bought Index Universal Life

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jimmy
Posts: 69
Joined: Sat Apr 27, 2013 1:29 am

advise for 24 y/o who just bought Index Universal Life

Post by jimmy »

24 year old
$1500 annual premium
500k Death benefit
not married, no kids
Paid first premium 4 months ago
Income 30k

A young co-worker just told me she was investing for her retirement and buying insurance with a Indexed Universal LIfe insurance policy with Fidelity Guarntee Life from a friend of hers. I told her this wasn't good for retirement and tried to explain the high costs of combining insurance with investing. She is so new to this she had a really hard time understanding it. I basically told her not to pay another cent into the policy and see if she could get any money back. I explained a Roth IRA would be best for her to contribute but I'm really trying to help her get our of her current situation. She seems a little uncomfortable to go back to the agent because it's her friend and she said all of her friends are in the same policy... Does anybody have a good link or article that could explain the negatives of a universal policy as a retirement plan? Also does anybody know if she will get any money back? Thanks for any feedback.. Just trying to help this girl cut her losses while she can.
livesoft
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Re: advise for 24 y/o who just bought Index Universal Life

Post by livesoft »

Google: "Don't buy life insurance from a friend"
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FlyOverState
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Re: advise for 24 y/o who just bought Index Universal Life

Post by FlyOverState »

livesoft wrote:Google: "Don't buy life insurance from a friend"
Interesting results: http://lmgtfy.com/?q=%22Don%27t+buy+lif ... +friend%22
Thanks, | John | | FlyOverState
YttriumNitrate
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Re: advise for 24 y/o who just bought Index Universal Life

Post by YttriumNitrate »

FlyOverState wrote:
livesoft wrote:Google: "Don't buy life insurance from a friend"
Interesting results: http://lmgtfy.com/?q=%22Don%27t+buy+lif ... +friend%22
Goodness, is there some Booglehead in Mountain View, CA who makes sure all Boglehead posts are indexed by GoogleBot within 5 millisecond of them being posted.
bluemarlin08
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Re: advise for 24 y/o who just bought Index Universal Life

Post by bluemarlin08 »

Cancel the policy, the most you lost was premiums paid, consider it a lesson. You can probably get all your premiums back with a letter to the company explaining you didn't really understand the policy. If you lose the agent as a friend, they were never a friend. Many companies will do a total refund because these policies are very difficult to understand.
Many of us as agents have sample documents we use to mail companies regarding this issue.
gwrvmd
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Re: advise for 24 y/o who just bought Index Universal Life

Post by gwrvmd »

Investing and insurance are two very different subjects
Never buy insurance through a stock broker
Never buy investments through an insurance agent
What was the reason that an unmarried person 24 years old bought $500,000 worth of life insurance?
That's 17 times her annual salary, who is the beneficiary?,(so far it is the insurance agent).......Gordon
(To the OP...This post is written for your friend to read)
Disciple of John Neff
dhodson
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Re: advise for 24 y/o who just bought Index Universal Life

Post by dhodson »

Whitecoatinvestor has a series on these
Calm Man
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Re: advise for 24 y/o who just bought Index Universal Life

Post by Calm Man »

OP,, no good deed goes unpunished. But partial deeds are good. You are not her investment adviser, financial planner nor her father. And if she is a co-worker I am going to assume she is mentally competent. Why don't you refer her to this forum or even forward her this thread and let her do some research. Although those of us here know the policy should be cancelled, to her "throwing out" what she has already paid might be annoying and she needs to convince herself. Good luck to the young lady.
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MossySF
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Re: advise for 24 y/o who just bought Index Universal Life

Post by MossySF »

You don't even need to ask the agent to cancel. Just stop paying it and it auto cancels.
BruDude
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Re: advise for 24 y/o who just bought Index Universal Life

Post by BruDude »

Calm Man wrote:OP,, no good deed goes unpunished. But partial deeds are good. You are not her investment adviser, financial planner nor her father. And if she is a co-worker I am going to assume she is mentally competent. Why don't you refer her to this forum or even forward her this thread and let her do some research. Although those of us here know the policy should be cancelled, to her "throwing out" what she has already paid might be annoying and she needs to convince herself. Good luck to the young lady.
x2

Keep in mind that someone is also the beneficiary of the life insurance, probably her parents or siblings. If you tell her to cancel it and she dies after you tried to "help her", there is always the possibility that you get sued by the beneficiary and incur a lot of legal fees just to clear yourself of any wrongdoing. Sometimes those lawsuits can wind up with a settlement to avoid the legal fees even if you feel you've done nothing wrong. I've seen it happen before. Tread carefully.
denovo
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Re: advise for 24 y/o who just bought Index Universal Life

Post by denovo »

BruDude wrote:
Calm Man wrote:OP,, no good deed goes unpunished. But partial deeds are good. You are not her investment adviser, financial planner nor her father. And if she is a co-worker I am going to assume she is mentally competent. Why don't you refer her to this forum or even forward her this thread and let her do some research. Although those of us here know the policy should be cancelled, to her "throwing out" what she has already paid might be annoying and she needs to convince herself. Good luck to the young lady.
x2

Keep in mind that someone is also the beneficiary of the life insurance, probably her parents or siblings. If you tell her to cancel it and she dies after you tried to "help her", there is always the possibility that you get sued by the beneficiary and incur a lot of legal fees just to clear yourself of any wrongdoing. Sometimes those lawsuits can wind up with a settlement to avoid the legal fees even if you feel you've done nothing wrong. I've seen it happen before. Tread carefully.

Ever heard of good samaritan laws? I am 99.99 percent certain that nothing would happen.
"Don't trust everything you read on the Internet"- Abraham Lincoln
BruDude
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Re: advise for 24 y/o who just bought Index Universal Life

Post by BruDude »

denovo wrote:
BruDude wrote:
Calm Man wrote:OP,, no good deed goes unpunished. But partial deeds are good. You are not her investment adviser, financial planner nor her father. And if she is a co-worker I am going to assume she is mentally competent. Why don't you refer her to this forum or even forward her this thread and let her do some research. Although those of us here know the policy should be cancelled, to her "throwing out" what she has already paid might be annoying and she needs to convince herself. Good luck to the young lady.
x2

Keep in mind that someone is also the beneficiary of the life insurance, probably her parents or siblings. If you tell her to cancel it and she dies after you tried to "help her", there is always the possibility that you get sued by the beneficiary and incur a lot of legal fees just to clear yourself of any wrongdoing. Sometimes those lawsuits can wind up with a settlement to avoid the legal fees even if you feel you've done nothing wrong. I've seen it happen before. Tread carefully.

Ever heard of good samaritan laws? I am 99.99 percent certain that nothing would happen.
Telling someone to cancel a life insurance policy has nothing to do with that. When the beneficiary finds out you cost them $500k by advising her to cancel it, who will be left to sue? Just because you believe it's a bad product doesn't mean an attorney won't take the case. Then you get to pay your own attorney $300/hour to fight it, and for what? There's a difference between pointing someone in the right direction and outright advising them on what to do.
denovo
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Re: advise for 24 y/o who just bought Index Universal Life

Post by denovo »

Can you show me a case anywhere in the 50 states where someone gave someone else free financial advice, receiving no compensation, and was successfully sued?
"Don't trust everything you read on the Internet"- Abraham Lincoln
BruDude
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Re: advise for 24 y/o who just bought Index Universal Life

Post by BruDude »

denovo wrote:Can you show me a case anywhere in the 50 states where someone gave someone else free financial advice, receiving no compensation, and was successfully sued?
I'm not going to derail this post. You can get sued even if the other person is totally wrong. You'll still have to defend yourself and you probably don't want to go to court over $500k without an attorney.
placeholder
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Re: advise for 24 y/o who just bought Index Universal Life

Post by placeholder »

BruDude wrote:I'm not going to derail this post. You can get sued even if the other person is totally wrong. You'll still have to defend yourself and you probably don't want to go to court over $500k without an attorney.
I'd be interested to see one that was even went to trial regardless of outcome just so we could learn from the circumstances and use it to guide our future approaches to helping others.
dhodson
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Re: advise for 24 y/o who just bought Index Universal Life

Post by dhodson »

If you say something like if it were me, I'd have appropriate term in place then surrender it, then I doubt there is much risk. If you badger the family into doing something they don't want to then that might be different. I'm not a lawyer.
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