Salvaging help please after Whole Life misrepresentation

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Topic Author
TXInd
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Joined: Tue Jun 09, 2015 8:05 pm

Salvaging help please after Whole Life misrepresentation

Post by TXInd » Thu Jun 11, 2015 12:25 am


[N.B. There has been an update since this first post that worsened the situation than originally detailed.]


Hello Bogleheads,

I found this forum when I was doing online due diligence on Whole Life insurance and CFPs. I did this search because my deep gut instinct was telling me to get out of the MassMutual Limited Payment Whole Life Legacy 65 that my CFP had put me in last year when I sought out professional help in getting my retirement plans better established than what I had been doing. I'm soured on “professional” financial help now, and would rather get myself well-versed than rely on professionals. It's hard getting over one's own inertia and one's own self-preservation habits, though.

Putting a lot of trust into the CFP, because she was a casual acquaintance and was a friend of a friend who seemed to have progressed very well on her road to “financial wealth” for retirement, I thought the products the CFP put me in was solely for my benefit and I didn't question her CFP plans. After all, she spent hours and hours with me in the first meeting on my finances and she wouldn't do something non-fiduciary, right? But, something nagged at me a few months later and I went online and found such sites as the White Coat Investor, with reports after reports of people who got sold whole life and regretted it and with advice to stay away from whole life. Further searches online revealed other sites that warned investors against it, again and again. The only places promoting it: insurance sales sites.

When I learned that the CFP would have gotten a big honkin' commission off of that big first chunk of premium I made ($46K all at once for the entire year), I couldn't help but feel suspicious and that there's a huge conflict of interest here. Then, in the process, I realized the CFP also put me in essentially another insurance product – within the SEP-IRA she opened for me (I have another SEP account with Vanguard that I started on my own years ago right before the big market meltdown of 2008 and I'd lost 33% of the chunk that I'd put in, scarring me for life) – an annuity that was tied to the market. Granted, I had told her that I wanted something that would protect my original deposits while the market was so high and had to fall eventually, and though, yes, yes, you can't try to play the game of timing the market, I wanted to avoid another move of getting in with a chunk of money while the market was so high. (The adage of “sell high and buy low” reverberates in my head and I can't help but think that getting back in now while “high” is setting myself up for another fall.)

I've been sitting out of the market, holding my maxed-out SEP-IRA yearly contributions in cash (money market, which has risks too, I know) since 2012 waiting to get back in so that I can park my money and not look at it again... well, at least not until the following week. You can imagine my dismay watching the market shoot up over the last three years waiting for the “right” time to get back in. (But I know my luck – I don't have any. Everyone who's in the market now should be happy I stayed out, because had I gone in, I would have sunken it and ruined your lives.)

That's the background and I now need to fix things. The cash value life insurance is a limited payment whole life with premiums to age 65. I have no options to convert this to a 10-pay (which, BTW, the CFP didn't tell me about or offer me and selected the 65 with the idea that the WL would be supplemental retirement “bond” investment”). A couple of days ago I told the CFP to get me out of WL without losing the money I'd already put in. I knew that I had the option to decrease the premiums I put in depending on my financial situation, so I wasn't fearful of not being able to make payments. So the pissed-off CFP checked with the mutual company she worked with (which, BTW, sent her among a few elite others to Italy this year because she's their “best independent financial advisor” – I'll let you all groan and laugh at that one as I did when I heard from our mutual friend about this reward for selling advising) and confirmed that the policy can't be converted to any other shorter term option. So, in order to not sacrifice the $46K in cancelling the policy, I plan to make only minuscule premiums, on the order of $50/month or $600/year for a total of $12,000 over the next 20 years. I can handle that in order to keep my larger chunk of $46K.

What do you all think? Or should I consider another angle or option? Keep in mind that one of the benefits I liked about the WL was asset protection, as my profession makes me a target for opportunists looking for a winning lottery ticket. I have no children to cover for, but may one day. One of my needs was how I can protect my earnings outside of protected vehicles like SEP.

I haven't figured out what to do about the annuity yet. Since it's sitting in a SEP, I think I can move it out to regular mutual funds in a SEP. Oh, and another thing, I thought the CFP was going to help me actively manage the SEP using something unique that I don't have access to, but what does she do? She puts me in a life cycle mutual fund index in the annuity. Gee, I did and can do that for myself at Vanguard for lower operating expenses. I wonder how big her commission was on the annuity.

All around, I think I have been given really bad, really conflicted interest advice and cookie cutter financial plans from a CFP, but a CFP who's masterfully awesome at her job at selling.

Thanks for reading this financial refugee's long introduction for help.

Best,
TXInd
Last edited by TXInd on Thu Jun 11, 2015 11:47 pm, edited 2 times in total.

CFM300
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Re: Salvaging help please after sales job by CFP

Post by CFM300 » Thu Jun 11, 2015 11:20 am

I don't know enough about insurance to help, but I'll respond with some questions and an (obvious) suggestion mostly in the hope that it will encourage others to respond.

1. Is there no date after which you can got out of your whole life policy by paying some mild surrender fees? I mean, is it really as black and white as you make it sound? Either you continue to pay for 20 years or you lose your entire $46k? I wouldn't want to lose $46k, but I sure as heck wouldn't want to be dealing that policy for 20 years either.

2. A life cycle fund of funds inside an annuity inside a SEP? That's sounds incredible to me. Have you asked your CFP to explain his/her rationale for such a set up? According to this, at least, CFP's do have a fiduciary responsibility to their clients.

http://www.cfp.net/public-policy/public ... y-standard

3. Maybe call Vanguard and see if you can move the SEP to them? They might be able to help you unwind that mess at least.

Good luck.

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Matahari
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Re: Salvaging help please after sales job by CFP

Post by Matahari » Thu Jun 11, 2015 12:06 pm

It sounds like you are a physician or other medical professional. Physicians are prime targets for insurance salesmen disguised as "financial advisors," even those who are CFPs. Like most people, but especially because they have different concerns, unsuspecting physicians are susceptible to sales pitches that tout
-- "asset protection"
-- "good, safe investment"
-- "saves taxes"

Life insurance products are marketed using these tactics and salesmen use pages of projections to draw you in.

Sadly, you should have done your due diligence BEFORE you purchased a financial product because you have now entered into a life insurance contract. And, before agreeing to purchase the insurance, you should have understood the terms of your agent's commissions and how that affected the net value of your initial premium payment and how it will continue to affect your future periodic premiums.

I speak from experience because in the mid-1990s, both my H and I purchased vari-exceptional life insurance policies that (1) provided life insurance and (2) allowed us to "invest" large premiums into "investments" in underlying mutual funds. At the time, I carefully reviewed all the materials and understood from the outset the commissions, expenses and fees for the life of the product. I understood the cost of everything.

The difference was that, at the same time, I was also investing our retirement funds at Vanguard and Fidelity after having done some real research on my own. The life insurance policies were and are not the centerpiece of our retirement investments. They have not performed that badly but, in hindsight, I would not have done the same thing.

Maybe others will have different ideas, but I suspect that your surrender fee for terminating the insurance product now will be high and you are likely to lose even more of your cash value. Unless there was misrepresentation by your agent that will allow you to cancel your policy, or you are within the "free look" period of life insurance (IIRC only), you are bound by your insurance contract and its terms will govern what you have to pay.

Physicians, because of their high income and relatively high net worth, are generally expected to be sophisticated investors. Considered as such, they are also frequently targeted as "accredited investors" by promoters and salespeople of financial instruments.

If you are a physician and have already discovered the Whitecoatinvestor website, you might go ahead and buy the book, read it and take measured steps to redirect your financial life going forward.


By definition, everyone who stands to gain by selling you a product has a conflict of interest. That is not a fatal element of a professional relationship, but you should certainly have been aware of it. Just ask, are you willing to sign a fiduciary statement to the effect that you do not have a conflict of interest. Or, how are you getting paid when you give me advice.

The annuity will likely have similar surrender fees.

Good luck.

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windhog
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Re: Salvaging help please after sales job by CFP

Post by windhog » Thu Jun 11, 2015 1:34 pm

Hi,

Your post is not unique, and I can commiserate with your frustration. Let me mention a few steps that might be helpful. First, I suggest you use the Search function on this site to identify prior discussions of this problem by folks who understand the industry and insurance products. (If nothing else, you will recognize how much company you have, myself included.) Generally, when folks here post about what to do with their WL policies, the knowledgeable insurance posters advise the owner request an in-force illustration to get clarity about the status of their contract. This information will help guide any decisions you make.

I would advise caution in removing an insurance contract from a retirement plan: this might be a taxable event. It seems like you have only had one year in this annuity contract, which suggests that your surrender fees will be quite high and likely equal any cash value that you might have. It would not surprise me to learn that 90+% of your first premium went to your sales person as their commission. Your long-term financial interest might be best served by viewing your $46k as a sunk cost and take this expensive lesson to heart. Plenty of smart people have paid higher tuition than this.

I would suggest you use the link provided by CFM300 to the CFP organization and consider a complaint against your advisor. I doubt it will solve your problem, but letting this kind of advice stand as meeting a fiduciary standard is hard to accept.

Finally, I would suggest that you spend some time on the Wiki and consider ‘drinking the Kool-Aid’ of Boglehead investing. Your post has too many references to market-timing and bad luck to ignore, and without a different attitude you will continue to struggle. Take a deep breath and make better decisions going forward: the past is done.

I hope this helps.
Paul

Topic Author
TXInd
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Re: Salvaging help please after sales job by CFP

Post by TXInd » Thu Jun 11, 2015 4:58 pm

Thank you for the responses I have received thus far, and I hope that many others will be willing to respond with their suggestions, as well, especially those who have already implemented a salvaging plan for their own situation.

CFM300: Thank you for the help. In answer to your questions:

1.There is a date at which the policy is paid up and no more premiums need to be paid. This is a limited payment Whole Life, rather than one that has to be paid until death to keep it in force. At the age of 65, neither the reinvested dividends nor a premium has to be paid. In fact, before the age of 65, there is a point at which the dividends will pay the premiums, but this would decrease the accrued value (of course, this is assuming current dividend rate of 7% and current interest rates. Although, at 7%, I know that as an “investment”, the returns should be higher, so what I see on the in-force illustration indicates that fees have shrunken that down.) If going as projected, the amount I paid in premiums would equal the cash value at around year 7. But, I doubt that, and suspect the break even point is more likely around year 10. My plan is to either cash out or do a 1035 exchange to Vanguard's annuity, (which was one of the recommendations I read about on the White Coat Investor).

If the loss were much less than the $45K, then I would just eat it and consider it a Stupid Tax (to borrow from WCI), but being that it is such a large amount, I'm trying to strategize a way to make it bearable to have to stick with the WL for the amount of time it takes to break even. That is why I thought of decreasing the premium payments to such a comparatively small amount (and therefore the face value of the life insurance, but I wasn't concerned about the death benefit, so that decrease doesn't worry me.) So, if I effectively reduce the premiums down to, say, $20/mth, that's an additional $240/yr and, at the most, I'd be paying an additional $4800 over 20 years to salvage the $46K.

This is where I'd like to get others' opinions as to whether you think this is an effective salvaging strategy or if there is another salvaging strategy (besides the 1035 exchange.)

The CFP is working on getting me a new in-force illustration for the $20/mth, because, she said, she didn't know what would happen to the $46K with such a drastic drop in premiums. If it were just a drop down to, say, $3000/mth, it would be a different matter. My question to her: If I could always drop the premium whenever I needed, as she told me a year ago I could, why does it matter whether the drop was to $20 or $3000? She said she didn't know and had to ask first for the in-force illustration.

2. I'll be moving the annuity inside the SEP to Vanguard. I just haven't tackled this one yet.

3. Vanguard is on my call list. I already have a SEP with them, so I can easily move my money back.

Thanks again for your responding and helping. I very much appreciate it.

Topic Author
TXInd
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Re: Salvaging help please after sales job by CFP

Post by TXInd » Thu Jun 11, 2015 5:05 pm

Matahari, thank you for responding with your thoughts.

I have already berated myself. I'm good at a few things, two of them being saving and not spending money. So, to have fallen for this, I very much punish myself. It never occurred to me that the CFP, whom I knew on a personal basis, would ever do anything that wasn't in my best interest. It just didn't. It didn't occur to me that she would get a commission, nor one so big. I didn't do any due diligence before signing because I had no suspicion or misgivings or gut instinct for flight before the transactions. I realize all the "shoulds" that I should have done beforehand, but I didn't and I can't change that. I am, however, trying to prevent another stupid move by doing what due diligence I can now before I take additional action on this Whole Life. That is why I asked those who have experience with WL and/or had been through the ringer for their opinion regarding my strategy to salvage the $$46K by severely reducing the premiums to $20/mth ($240/year) during the 20 years of this policy.

I am beyond the “free look” period. I do think the CFP misrepresented things, but I have no evidence, like emails or recorded conversations to use as leverage to cancel the policy. It would be my word against hers and unless I go down the road of litigation to try to get compensation for the loss, I don't know how I can force the CFP and/or the mutual compnay to get my policy cancelled. If you have a suggestion regarding that route, I'd be grateful for details you may have.

Yes, the CFP spoke magical words to me with “asset protection” - although, to be fair, those were my words to her first - and “safe investment”. I have a very low tolerance for risk and view the best investment of money is the money I save through work. I considered the WL as a savings account that was protected from preying opportunists that had the added bonus of dividends over a long term. I wasn't concerned with taxes as a reason for the WL, though, as I already view taxes as a required burden to be able to live in a 1st world, organized, and governed society. And, to be fair to the CFP, I approached her, she didn't approach me, but I'm sure I made for an easy sale with my readiness to move forward from my own inertia of just saving money for retirement.

Thanks again for responding and for your input.

Topic Author
TXInd
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Re: Salvaging help please after sales job by CFP

Post by TXInd » Thu Jun 11, 2015 5:10 pm

Hi Paul,

Thank you very much for your advice. I did do a search on Bogleheads, but I couldn't find something specific to working out a plan to deal with the WL when cancelling or cashing out is not the desired option. What do you think of my strategy to salvage the $46K by making the severely small yearly premiums ($240/yr) until the time that I can get out without losing that amount?

I would also really like to hear what others think about that strategy I've detailed regarding the severely small yearly premiums.

Yes, I have spent hours on Bogleheads' wiki, and White Coat Investor. I'm even planning on buying the Bogleheads book. I just haven't done it yet. Bogleheads forum has given me invaluable information moving forward.

And, indeed I am a poster child and prime example of how NOT to behave , NOT to think, NOT to react when it comes to investing. Like I noted, it is hard to break from the inertia and inherent self-preservation wiring of my brain regarding investing. I do want to drink the Bogleheads kool-aid, though, as soon as I can break from the chains of adverse noxious stimulant response.

Thank you for your thoughts – they did help.

Topic Author
TXInd
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Re: Salvaging help please after sales job by CFP

Post by TXInd » Thu Jun 11, 2015 5:59 pm

Update:

I called MassMutual after yet again the CFP deviated from her original statements to me. Turns out the claim made by the CFP that I could decrease the premiums to whatever I wanted may not be possible unless the WL was setup as a "dump" of one lump payment with a rider to cover in excess a lower premium, and even then, not by a large amount. (I really don't understand this so, I can't really describe it.) In which case, since I was misled by the CFP, MassMutual customer service rep suggested I submit a complaint regarding the CFP for the misrepresentation. Depending on the outcome of their investigation, the premium loss can be waived.

Still, without written documentation, I wonder how they can judge what amounts to a he-said, she-said situation.

I don't have a problem lodging a complaint for wrongful behavior, but when it's someone you know on a personal basis, there is discomfort in doing that.

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LowER
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Re: Salvaging help please after sales job by CFP

Post by LowER » Thu Jun 11, 2015 6:07 pm

TXInd wrote: (snip) I don't have a problem lodging a complaint for wrongful behavior, but when it's someone you know on a personal basis, there is discomfort in doing that.
But will it be $46,000 worth of discomfort?

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FelixTheCat
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Re: Salvaging help please after sales job by CFP

Post by FelixTheCat » Thu Jun 11, 2015 6:19 pm

TXInd wrote:(But I know my luck – I don't have any. Everyone who's in the market now should be happy I stayed out, because had I gone in, I would have sunken it and ruined your lives.)
Thanks for not ruining our lives. :D Just messin' with you.

Today's the first day towards happy Bogleness. Start reading the wiki http://www.bogleheads.org/wiki/Getting_started Then read another article that interests you and so on. You will achieve financial success.

P.S. Don't beat yourself up over your "learning experiences"; We've all been through them.
Last edited by FelixTheCat on Thu Jun 11, 2015 6:27 pm, edited 1 time in total.
Felix is a wonderful, wonderful cat.

CFM300
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Re: Salvaging help please after sales job by CFP

Post by CFM300 » Thu Jun 11, 2015 6:24 pm

If legal in your state, perhaps you should begin recording your conversation with your CFP. If I'm understanding your previous posts, she recently acknowledged in a conversation that she did tell you (before you signed the contract?) that you could reduce your premiums, she just wasn't sure now that you could reduce them as much as you want.

A recording of her acknowledging that she made incorrect statements (even if unintentional) is how they'll know, without written documentation, that you were misled. Whether that degree of misrepresentation will be sufficient to void your contract, I have no idea.

Good luck.

Topic Author
TXInd
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Re: Salvaging help please after sales job by CFP

Post by TXInd » Thu Jun 11, 2015 10:28 pm

LowER wrote:
TXInd wrote: (snip) I don't have a problem lodging a complaint for wrongful behavior, but when it's someone you know on a personal basis, there is discomfort in doing that.
But will it be $46,000 worth of discomfort?
Point well taken. Thanks for the nudge to keep perspective. The discomfort has already been replaced by disdain for the CFP.

Topic Author
TXInd
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Re: Salvaging help please after sales job by CFP

Post by TXInd » Thu Jun 11, 2015 10:34 pm

FelixTheCat wrote:
TXInd wrote:(But I know my luck – I don't have any. Everyone who's in the market now should be happy I stayed out, because had I gone in, I would have sunken it and ruined your lives.)
Thanks for not ruining our lives. :D Just messin' with you.

Today's the first day towards happy Bogleness. Start reading the wiki http://www.bogleheads.org/wiki/Getting_started Then read another article that interests you and so on. You will achieve financial success.

P.S. Don't beat yourself up over your "learning experiences"; We've all been through them.


You gave me my first chuckle in 4 days of stress ulcer formation. And thank you for the note to perk up and to see this as a start towards the rest of a better financial life. The mutilation of 2008 doesn't seem so bad now after this spectacular experience.

Topic Author
TXInd
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Re: Salvaging help please after sales job by CFP

Post by TXInd » Thu Jun 11, 2015 10:42 pm

CFM300 wrote:If legal in your state, perhaps you should begin recording your conversation with your CFP. If I'm understanding your previous posts, she recently acknowledged in a conversation that she did tell you (before you signed the contract?) that you could reduce your premiums, she just wasn't sure now that you could reduce them as much as you want.

A recording of her acknowledging that she made incorrect statements (even if unintentional) is how they'll know, without written documentation, that you were misled. Whether that degree of misrepresentation will be sufficient to void your contract, I have no idea.

Good luck.
Yes, the CFP acknowledged what she told me and it seems to me that in stating she must obtain an in-force illustration for the reduced amount for the changed policy, she's giving evidence of what she told me, otherwise there wouldn't be a need for it. I think...

I'll have to record the conversation next time, as you suggested. Thanks for your advice.

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BL
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Re: Salvaging help please after sales job by CFP

Post by BL » Thu Jun 11, 2015 11:16 pm

Perhaps you are more likely to get help from insurance experts here if you edit your title to include WL and maybe annuity and then name and describe them by editing the very first entry so they will see it immediately.

I would persue this with the company and also your state insurance watchdog, although I have no idea if they would cancel it without it costing you. You should also get an in-force illustration to find out what you would have with the original plan and what you could get back if you cancel at various times. It is going to cost you whatever you do unless you win! If you could get something out of it, that might be worth more in 20 years than leaving it in and paying more.

Simply investing in something like Total Stock Market would have gotten you low-ER funds that are quite tax-efficient with only capital gains being taxed at 15-20% when you sell them. Also you could tax-loss-harvest in market crashes by selling at a loss and buying similar but not the same funds.

Topic Author
TXInd
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Re: Salvaging help please after Whole Life misrepresentation

Post by TXInd » Thu Jun 11, 2015 11:38 pm

Thank you very much, BL. I did just as you suggested and edited the title and the opening post.

And, yes, I think I'm in a for a major contentious case argument. Appreciate your advice about this and information regarding investments, especially the tax-loss-harvest info.

2comma
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Re: Salvaging help please after Whole Life misrepresentation

Post by 2comma » Thu Jun 11, 2015 11:58 pm

of course, this is assuming current dividend rate of 7% and current interest rates. Although, at 7%, I know that as an “investment”, the returns should be higher, so what I see on the in-force illustration indicates that fees have shrunken that down.
Hi TXInd, can you explain what you mean by this. I no nothing about WL insurance - other than to avoid it. Are you saying the dividend rate is 7%? I am sure there is no way they can produce a 7% return on an insurance product - that would be pushing it for a total stock investment.
If I am stupid I will pay.

normaldude
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Re: Salvaging help please after Whole Life misrepresentation

Post by normaldude » Fri Jun 12, 2015 12:30 am

I don't know much about insurance investment products (whole life, variable annuities), except to avoid them. But my gut feeling is..

1) If possible, stop talking to the CFP. She sounds like some commissioned sleazeball that will keep feeding you lies, and enriching herself. Is it possible to deal directly with MassMutual from now on?

2) Is there anyway you can just liquidate everything, pay some surrender fees, and start from scratch again? Personally, I'd be willing to pay a lot to make a clean break.

3) Maybe talk to some other CFPs who offer "free consultation", to see if one can help you unwind your situation. Do a search for CFPs who are "fee only" (non-commissioned), and who offer "free consultation". Tell them your situation, and hear what they each have to say. Avoid any CFPs who love insurance investment products (whole life, variable annuities), or who hate Vanguard index funds.

http://www.fpanet.org
http://napfa.org
http://garrettplanningnetwork.com

Once you get cash-in-hand, then take your money to Vanguard.com.

Topic Author
TXInd
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Re: Salvaging help please after Whole Life misrepresentation

Post by TXInd » Fri Jun 12, 2015 12:51 am

2comma wrote:
of course, this is assuming current dividend rate of 7% and current interest rates. Although, at 7%, I know that as an “investment”, the returns should be higher, so what I see on the in-force illustration indicates that fees have shrunken that down.
Hi TXInd, can you explain what you mean by this. I no nothing about WL insurance - other than to avoid it. Are you saying the dividend rate is 7%? I am sure there is no way they can produce a 7% return on an insurance product - that would be pushing it for a total stock investment.

Hi 2comma,

Per the CFP, the policy pays dividends at a rate of 7%. That has been the historical rate and current rate offered by MassMutual, and it's tied to interest rates. Of course, the CFP likes to repeatedly state that interest rates will rise, intimating that my dividends and accumulated cash value will be even higher. (Of course, back when interest rates were really high, why was the dividend rate still 7%?) However, when I peruse the in-force illustration, which gives me the dividends earned for each year at the current rate, shows the cash value earned each year, and the face-value growth, there is no way that my premiums are actually earning 7% dividends. For example, in the illustration, by the age of 65, at current rate of 7%, after 21 years of making nearly $46K yearly premiums, I will have $1.6 million in cash value (3 million+ face value death benefit). But, after 21 years of nearly $46K yearly payments, I would have put in $960,000 in premiums. There is no way that a $960,000 in total premiums at 7% interest over 21 years would only accumulate a mere $700,000 (1.6 million - 960,000). So, there has got to be non-transparent fees that severely cut into those premiums, or dividends or whatever they do. Or it's really just all going to the death benefit, which is not what she had been telling me. I knew that Whole Life wasn't ever going to be at the level of traditional investments. So whenever the CFP would emphasize the 7%, I assumed that the 7% wasn't "real" or really wasn't the final and actual rate of return and there was something in this that I didn't understand. At least, the way the conversations with the CFP would go is that I (annoyingly) obviously didn't understand when it was so obvious to her and to everyone else, so what was the problem leading to my lack of comprehension?

One of the things I learned in searching online was that unlike stocks, mutual funds, and bonds, where the prospectus has to reveal all expenses, a life insurance policy does not, since it's not governed by the same rules. So, while all the good rates and dividends are proudly displayed, all the administrative and other expenses are never shown and are impossible to obtain, because insurance companies are not required to reveal them as investment products are.

I stopped trying to understand it, because whenever I ask questions of the CFP, she gets testy, irritated and always prefaces everything with, "I've already explained this to you..." or "We've spent hours talking about this already..." or "When I tell you something, it is for your benefit..." It is lovely to have a CFP talk to me like I'm an errant child who is apparently too stupid since the explanations are just so obvious.

Did that clarify things? I'm not sure I did an adequate job of explaining it.

Topic Author
TXInd
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Re: Salvaging help please after Whole Life misrepresentation

Post by TXInd » Fri Jun 12, 2015 1:25 am

Hi Normaldude,

1. I can't wait to stop talking to her myself, but I'm afraid I'm going to have to until I get MassMutual Customer Service involved and they investigate. Interestingly, after calling her and asking questions on 2 days and then I tell her I want I want out of the WL or at least decrease the premiums, she tells me that she cannot work with me any longer. My reply was that I know. Then, today, she makes the comment that it was I who did not want to work with her and that she would be happy to "discuss with [my] new advisor" so that everyone was on the same page. I have a suspicion that someone told her that she appeared to be acting in non-fiduciary ways and that she had better make it look as if everything was my choice and doing. I don't respond if indeed she's playing at damage control. I wonder what fiduciary violation there would be for a CFP to state that they're going to dump a client after the client tells the CFP that they no longer want a product the CFP had been pushing on the client.

The CFP was almost placating today, constantly stating, "Whatever you want. It's your decision." And she kept urging me to send her a statement for "compliance issues" that it was my decision to decrease the premiums and not her advising me to do so.

2. If I were to cash out now completely, I'd only have about $1000 cash value. It may be that in the end, I will pay the Stupid Tax of $46K after all. But I'm going to fight it first. Now that I'm involving MassMutual directly, there are more variables that I can't account for. If there's even a chance I can recover that original amount, I will try.

3. I'm doing something even better than talking to other CFP's. I'm talking to Bogleheads! :) I may just make some inquiries to other CFPs...

Thanks for your help, Normaldude.

ThisTimeItsDifferent
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Re: Salvaging help please after Whole Life misrepresentation

Post by ThisTimeItsDifferent » Fri Jun 12, 2015 1:26 am

Excel's Future Value function shows that a return of 7% a year on annual payments of $46,000 for 21 years would be worth $2,063,798.13 at the end of that time.
The IRR function shows an internal rate of return for the 21 years of $46,000 payments and a final value of $1.6M of 4.4%

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BL
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Re: Salvaging help please after Whole Life misrepresentation

Post by BL » Fri Jun 12, 2015 6:44 am

I hope you realize that no one at the company is really on "your side". They just want you to go away as quietly as possible without hurting their bottom line. You are expecting too much if you expect anyone who sells this stuff to be on your side.

Whole life is life insurance, first and foremost. It is not a great investment vehicle no matter what spin they put on it. You can borrow from your cash value but you will be paying interest at X%. If you keep it long enough that the cash value exceeds your premiums, you will pay ordinary taxes (not capital gains rates) on it if you cash it out. Those interest rates don't even make sense.

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Re: Salvaging help please after Whole Life misrepresentation

Post by dolphinsaremammals » Fri Jun 12, 2015 7:03 am

I'm sorry you have gotten in this mess.

I would definitely file a complaint against the CFP wherever possible. You sound somewhat reluctant to do this. Keep in mind that she is basically a crook. The fact that you know her or have mutual friends means nothing. Many of Madoff's victims were introduced by friends.

I would stop 100% talking to her. She is not going to look out for your interest in terms of any modification of the situation, and she is a liar.

$46,000 is a lot of money. Is the loss going to damage your retirement security or is it "just" a lot of money?

If I were you, I would read the heck out of the documentation so that I understood the terms, and then (I assume one can do this) talk to the company directly and ask about possible modifications. If this is not fixable, I would eat the $46,000 and get on with my life. The only compensation is if the complaint(s) filed bear any fruit.

I would also make darn sure any of my friends knew not to do business with this person, but there you have to be careful of slander situations.

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BL
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Re: Salvaging help please after Whole Life misrepresentation

Post by BL » Fri Jun 12, 2015 7:13 am

dolphinsaremammals wrote:I'm sorry you have gotten in this mess.

I would definitely file a complaint against the CFP wherever possible. You sound somewhat reluctant to do this. Keep in mind that she is basically a crook. The fact that you know her or have mutual friends means nothing. Many of Madoff's victims were introduced by friends.

I would stop 100% talking to her. She is not going to look out for your interest in terms of any modification of the situation, and she is a liar.

$46,000 is a lot of money. Is the loss going to damage your retirement security or is it "just" a lot of money?

If I were you, I would read the heck out of the documentation so that I understood the terms, and then (I assume one can do this) talk to the company directly and ask about possible modifications. If this is not fixable, I would eat the $46,000 and get on with my life. The only compensation is if the complaint(s) filed bear any fruit.

I would also make darn sure any of my friends knew not to do business with this person, but there you have to be careful of slander situations.
+1
Good advice.

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Matahari
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Re: Salvaging help please after Whole Life misrepresentation

Post by Matahari » Fri Jun 12, 2015 11:17 am

Some general thoughts that might be useful in helping you sort out avenues of action regarding the WL policy:

(1) If you intend to pursue some course of action to rescind the contract: you are up against the written contract itself. It will be difficult for you to claim that you did not know or understand what is contained in the contract because it is (generally) a reasonable duty to charge contracting parties to have read and agreed to the contract.

There are exceptions for misrepresentation, fraud, duress, undue influence, etc. but these will all require that you seek legal counsel to pursue action. Consider:
-- did you have sufficient time to review the proposal
-- was there missing information
-- did you get the complete document
-- did the CFP try to misdirect your attention to certain aspects of the policy

Verbal misrepresentations will be hard to prove, but if you received them, you should definitely document them in your notes.

How was it not clear to you that a large % of your premium would not be invested towards cash value.
Is there a schedule of the projected mortality charges for the life of the insurance contract? Schedule of fees and expenses. (I checked our policies and these were all contained in the prospectus and contract.)

(2) Disciplinary action against the CFP because of her actions: while this might be satisfactory from a personal standpoint, but it will likely not (by itself) get you out of the insurance contract.

Go higher at MassMutual.
Contact state insurance agency?

(3) Understanding the financial implications of the WL policy you purchased so that you can made decisions about what to do with it -- depending on its ongoing fees, expenses and the mortality charges, it's possible you may want to keep it in force for as long as possible, albeit as very expensive life insurance.

These WL products are sold all the time to unsuspecting people by "friends" or "friends of friends." If you are unable to extricate yourself from this one, then at least use it for what you can get out of it and learn a good and valuable lesson.

Thoughts: It is an expensive lesson, but not the end of the world. You have not offered context regarding your age and other finances other than to express concerns about investing and market timing. We all have made less-than-optimal decisions. Some of us have lost much more than $46K on poor investing decisions, but we are all here to try to learn and not repeat the same errors. Going forward, after you have sorted out what you want to about this WL policy, you should try to evaluate your overall financial situation and implement a sound and deliberate plan.

I hope this is helpful.

cricket49
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Re: Salvaging help please after Whole Life misrepresentation

Post by cricket49 » Fri Jun 12, 2015 11:30 am

BL wrote:I hope you realize that no one at the company is really on "your side". They just want you to go away as quietly as possible without hurting their bottom line. You are expecting too much if you expect anyone who sells this stuff to be on your side.

Whole life is life insurance, first and foremost. It is not a great investment vehicle no matter what spin they put on it. You can borrow from your cash value but you will be paying interest at X%. If you keep it long enough that the cash value exceeds your premiums, you will pay ordinary taxes (not capital gains rates) on it if you cash it out. Those interest rates don't even make sense.
Yes, they want you to go away....quietly.

Go up the food chain. Send letters to everyone associated with Mass Mutual who have the power to refund your money and make you go away. $46,000 is a huge amount of money to lose. I worked in corporate for years and the person who sent letters to the CEO always got results. If that does not work start writing letters to the National Association of Insurance Commissioners which regulates standard insurance law in your state.

Here is a link to Mass Mutual executives.

http://www.bloomberg.com/research/stock ... apId=21671

Good luck and keep fighting!
Expect the best. Prepare for the worst.

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Matahari
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Re: Salvaging help please after Whole Life misrepresentation

Post by Matahari » Fri Jun 12, 2015 11:46 am

Also, if you are planning on documenting all of your dealings with CFP and put it in writing to Mass Mutual in an effort to either have it rescind your WL policy or modify its terms, I strongly suggest that you empty your writing of emotion and "observances" and just present all the salient facts of your dealings, conversations, etc. with CFP in a chronological, strong and thorough manner. Review and edit and see if someone else reading it would easily understand how the misrepresentation by CFP occurred, not just believe that you were confused or misunderstood.

E.g.: CFP said that if I deposited $50,000, I would have $50,000 cash value. She never once mentioned that after after I deposit my premium and she took commission cut of $46K, I would have $4,000 cash value.

TBH, your posts are lengthy and you do not want to make it difficult for the recipient at MM to sort out your facts. Imagine that you are offering facts and do so in a succinct and concise way. Then, set out your demands and state what further escalated action you are prepared to do. Direct your correspondence to the correct party, addressing that party by name and title. Send it all by certified mail, return receipt requested.

It will not matter one iota that the CFP is a friend or acquaintance. MM will only act if there are facts that suggest that it will have more trouble than not unless it accedes to your demands. And there is absolutely no reason that it would if you do not present a strong case.

dhodson
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Re: Salvaging help please after Whole Life misrepresentation

Post by dhodson » Fri Jun 12, 2015 1:07 pm

You are not getting your money back.
They already have teams of lawyers on the books. Cost them nothing at this point
Your case is too weak since you seem to have asked for this.
Trying to reduce the face value won't help. Costs are already sunk and you aren't getting anything back by doing it. Paying monthly has about a 17% finance charge.

Options are to either 1035 exchange or ride this out for likely a 5% return on the death benefit unless you die prematurely.

You will find that there is never a 7% return on your money once you look at the in force illustrations.

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BL
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Re: Salvaging help please after Whole Life misrepresentation

Post by BL » Fri Jun 12, 2015 1:39 pm

I was hoping dhodson would comment. Nothing more to be said.

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windhog
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Re: Salvaging help please after Whole Life misrepresentation

Post by windhog » Fri Jun 12, 2015 1:44 pm

It seems to me that you are out to salvage your investment and are hoping that someone here can help you find the secret happy fix. The reality is that the industry has been working this deal for decades and has left you with no good options. Of course, their goals are to keep you: a) blissfully ignorant and satisfied with paying for their yachts or b) disgusted with your error and continuing to pay them in an effort to avoid the perception of loss. (Behavioral economics teaches us that avoiding loss is a much more powerful motivator than the realization of gains.) The last thing they want is for you to bail, which may be the most rational.

I would offer a comment about in-force illustrations, having seen my share. Your attention is drawn to the 7% growth column, but you need to understand that this is pie in the sky. There is a guaranteed growth figure buried in there somewhere, which is typically more like 1-2% that should be the basis for your planning. The insurance industry is built on the bond market, and they are taking their profits first before crediting your WL or annuity accounts. Got the picture?

I don’t know what to say about your plan to drastically reduce your premiums, but I am willing to bet that if you back down on the premium promised to the age of 65, then the insurance company will drastically change their promise of what your account will look like down the road. A (small) portion of every WL premium amounts to the cost of term insurance in the face amount of your policy. If you drop below that figure, you endanger the value of your life insurance, which is not a good idea.

My only other comment is a generalization that may or may not be helpful. It seems that the longer you hold on to this kind of policy, the less obnoxious your losses become. A crucial point in this scenario is: when does it dawn on you that you have been had? Do the forehead slap and the sinking feeling in your gut happen in the first year or so, or does it happen after five or six years of disappointing performance? Early learners are better off bailing out, late learners are better able to hold their nose and persist. To figure out what’s best you need to shift your focus from your short-term loss to the compounding effects of buy-and-hold investing.

I see that since I started drafting this note you have heard from lots of other folks with similar advice. I don't mean to pile on, just wanted to follow-up on my prior post and your response.

I hope this helps.
Paul

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powermega
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Re: Salvaging help please after Whole Life misrepresentation

Post by powermega » Fri Jun 12, 2015 2:12 pm

For starters, someone with a CFP designation does NOT have a fiduciary responsibility to a client. Only someone who operates as a Registered Investment Adviser (RIA) has that kind of duty to do what's best for their clients. There are plenty of insurance salesmen with various industry designations, including the CFP, who only need to adhere to the "suitability" standard, which is virtually meaningless.

I find it hard to believe that one could buy a WL policy with $46k and only have a cash value of a couple grand. Something is not right there. Can you give us a little more information about the policy? What is the base face amount? What are the required premiums for that base face amount?

As for the annuity in an IRA... To me, it is a telltale sign of incompetence (fraud?) to see an annuity inside of a qualified account like an IRA. There will never be a good explanation why one should buy a deferred annuity inside of a qualified account because you're putting a tax-deferred investment vehicle (the annuity) inside of an account that is tax-deferred itself (the IRA). That "double tax-deferred" result is redundant and costly. You should be able to surrender the annuity inside of the IRA whenever you want to. You will pay surrender charge fees to do so, and there is really no way around that. If you intend to move this IRA over to a real custodian like Vanguard, Schwab, Fidelity, etc, I suggest you get out of the annuity while you're at the current custodian. Be sure that you are not getting a distribution from the IRA, that you simply want to surrender the annuity inside of the IRA, and buy a different investment.
Even a stopped clock is right twice a day.

Miriam2
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Re: Salvaging help please after Whole Life misrepresentation

Post by Miriam2 » Fri Jun 12, 2015 2:18 pm

I'm not sure this will help because the experts have already weighed in here (and I'm no expert on this), but perhaps James Hunt can give you some ideas for the future with this policy.
You can reach him at www.evaluatelifeinsurance.org. He specializes in evaluating life insurance policies and making recommendations on what routes to take with them. Many Bogleheads have used him - you can google his name on this forum for other posts using his services.

You would send him a copy of your policy and he would go to work on it. We used him for a variable universal life policy (VUL). He was very helpful, spent over an hour on the phone with us explaining the details and deciphering the insurance "code," made suggestions with the pros and cons, followed up with emails.

He charges about $100 and it was well worth every penny. Our situation was different than yours, however, but if you wish more feedback, he may be a place to turn.
Good luck!

dhodson
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Re: Salvaging help please after Whole Life misrepresentation

Post by dhodson » Fri Jun 12, 2015 3:02 pm

A standard WL has zero cash value for 1-2 years so this isn't uncommon.

RIA means nothing they just say they are practicing under their insurance hat when selling insurance. Believe me I know.....

normaldude
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Re: Salvaging help please after Whole Life misrepresentation

Post by normaldude » Fri Jun 12, 2015 4:08 pm

Other than insurance investment products (like whole life), I can't think of any other (legal) investment products that are structured so that if you cash out after 1 year, you lose 98% of your money. Not mutual funds, real estate, gold, artwork, wine, CDs, hedge funds, venture capital funds. Even with diamond engagement rings, you can get probably get 50% of your money back. Sure, some investments are volatile and can crash. But whole life policies seem to be the only ones specifically structured so that if you cash out after 1 year, you lose 98% of your money.

MN Finance
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Re: Salvaging help please after Whole Life misrepresentation

Post by MN Finance » Fri Jun 12, 2015 4:53 pm

Let's just step back for a minute, take a breath and come back to earth.

You were sold a life insurance policy and annuity by an insurance agent (the fact that she has a CFP designation doesn't really enter the picture.) This is what insurance agents do. They sell insurance products. The fact that most investors here would do it different is not really material.

Your memory is that the agent told you the premiums could be reduced. That may or may not eventually be possible, but it's not possible right now. You can argue misrepresentation with the insurance company, but on the surface it seems unlikely that will get you anywhere. There may be a remote possibility the decide to let you out and make it go away to avoid a larger issue, but that seems unlikely. Again, just because these aren't the products most here would use doesn't mean it's inappropriate, unethical, or illegal. Like it or not.

Take some time to research what you own, post some questions and determine how to unwind these, if at all.The annuity will be fairly straightforward. You'll weigh the surrender cost against the reduced cost by investing the funds somewhere else. As mentioned the insurance will be a bit more complicated. You'll look at the in force illustration and determine if it makes sense to continue or do something else. In the mean time you're insured for a couple million dollars. Post the details when you receive them.

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Re: Salvaging help please after Whole Life misrepresentation

Post by bsteiner » Fri Jun 12, 2015 5:04 pm

MN Finance wrote:...You were sold a life insurance policy and annuity by an insurance agent ....
Isn't buying both an life insurance policy and an annuity like betting on both teams in the same game?

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powermega
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Re: Salvaging help please after Whole Life misrepresentation

Post by powermega » Fri Jun 12, 2015 6:00 pm

dhodson wrote:A standard WL has zero cash value for 1-2 years so this isn't uncommon.

RIA means nothing they just say they are practicing under their insurance hat when selling insurance. Believe me I know.....
The WL base cash value is zero at issue, but the part of the WL premium that was paid that went to buy PUA insurance would have a cash value at issue. I have a hard time believing that $46k is all base required premium for a WL policy, especially if the premium was slated to be some kind of large lump sum dump-in for the policy. The fact that they would also be able to even try to illustrate the policy going forward with no premium getting paid tells me that there should be significant PUA insurance in the policy from his first premium.

If someone has hired an RIA as an adviser, then that adviser must uphold a fiduciary standard. While it's possible for someone who is an RIA to sell insurance, what the OP describes would get a true RIA in a lawsuit. Namely, an annuity in an IRA, and selling a WL policy that is likely a MEC as a source of "tax free" retirement income.
Even a stopped clock is right twice a day.

dhodson
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Re: Salvaging help please after Whole Life misrepresentation

Post by dhodson » Fri Jun 12, 2015 6:13 pm

Hopefully he puts up an illustration but I bet there is little to no overfunding. I doubt he is mistaken on the csv since that's easy to figure out.

No it won't. He just says the op wanted guarantees against market like he posted above. Slam dunk for the agent.

MN Finance
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Re: Salvaging help please after Whole Life misrepresentation

Post by MN Finance » Fri Jun 12, 2015 9:36 pm

bsteiner wrote:
MN Finance wrote:...You were sold a life insurance policy and annuity by an insurance agent ....
Isn't buying both an life insurance policy and an annuity like betting on both teams in the same game?
Your academic question is valid and there are sometimes cases where you see this, but doesn't look at all like that here

MN Finance
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Re: Salvaging help please after Whole Life misrepresentation

Post by MN Finance » Fri Jun 12, 2015 9:41 pm

If someone has hired an RIA as an adviser, then that adviser must uphold a fiduciary standard. While it's possible for someone who is an RIA to sell insurance, what the OP describes would get a true RIA in a lawsuit. Namely, an annuity in an IRA, and selling a WL policy that is likely a MEC as a source of "tax free" retirement income.
Sorry, but this is just silly.

I have no interest in defending this crappy set of products, but it's pointless to pick it all apart. Focus on unwinding things.

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TXInd
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Re: Salvaging help please after Whole Life misrepresentation

Post by TXInd » Sat Jun 13, 2015 6:56 am

I was already grateful for the advice I'd received by the time BL suggested I edit my thread title to include Whole Life so that it might draw the attention of insurance experts. And, wow, did it ever bring out the cavalry... Thank you deeply to each and everyone who has commented to try to help me out. This is an amazing community.

First, to take Matahari's advice at avoiding writing lengthy posts, I'll try to keep things short.

1. As soon as I get the in-force illustration for the decreased premiums, I'll post it, with the original so that y'all can see and compare. Unfortunately, if the CFP doesn't provide it to me by Monday, I won't be able to post for a week as I'll be out of the country for a major conference.

2. I appreciate the stark reality of which dhodson and others have made me aware, but as bleak and as stacked against me as the situation is, I'd rather go down fighting than give these shysters an easy pass by getting me to do another roll over with a quiet exit. I am learning what you are teaching me, though, and as I get more information, I'll post them.

3. Thanks for confirming the numbers of the return at 7%, ThisTimeItsDifferent.

4. From dophinsaremammals: “$46,000 is a lot of money. Is the loss going to damage your retirement security or is it "just" a lot of money?” Point well taken.

5. Matahari, the list of steps you outlined gives me a nice general blueprint to guide me. I've already begun them.

6. Cricket49: Thank you for that link of MM executives! I downloaded it and will be making some nice new contacts.

7. From Powermega: “As for the annuity in an IRA... To me, it is a telltale sign of incompetence (fraud?) to see an annuity inside of a qualified account like an IRA....That "double tax-deferred" result is redundant and costly.” I had come to this realization some time ago (just not the costly part), but I kept reminding myself that the VA had a GMAB (Guaranteed Minimum Accumulation Benefit) that protected my principal if/when the market takes a dive, and that was why I stayed in for the past year. But, seeing your comment galvanized me – also I was getting more pissed by the day – to take action now rather than wait and I'd been on the phone for hours today between Vanguard and MassMutual to directly roll over all my qualified accounts back over to Vanguard. I have more details on this in another post, as I was very surprised to hear what an annuity guy at Vanguard advised me to do – or, rather, NOT do.

8. Miriam2: Thanks for info regarding James Hunt. I've seen his name brought up before her and on other sites. He's in my list of options to consider.

9. Bells went off in my head when normaldude wrote this: “whole life policies seem to be the only ones specifically structured so that if you cash out after 1 year, you lose 98” of your money.” Right on the head! Why is that?! The stock market is the way that it is by the nature of the beast with highs and lows and volatility. But a life insurance does NOT have to be the way that is. It was a product designed from the ground up – it wasn't a system that evolved -- and so didn't have to be designed to be this particulary way. What force of economics required that an insurance product be the way it is? Only possible answer: It was intentionally designed to be an obfuscating one-way siphon disguised as a life insurance to make it palatable enough to swallow. How did Whole Life ever get regulatory acceptance? (rhetorical question)

10. From MN Finance: “You were sold a life insurance policy and annuity by an insurance agent (the fact that she has a CFP designation doesn't really enter the picture.)” More ringing bells for me. I gave the CFP designation some measure of regard as an “expert”. After I'd replayed in my head the things the CFP said to me over the past year, it became more and more obvious what she was all about, but I still viewed her as a financial advisor, but one who sold insurance. Your comment shed a whole new light on what her identify is actually.

11: Regarding whether the WL premium went towards PUA or not, I don't know. The reason why I made the lump sum of $46K was because I got a discount making the annual payment rather than monthly payments, when in actuality it was meant to be $4000/mth for total $48K/year. Since it was never planned to be a “dump” ahead of time or planned for overfunding, I am doubting that that''s how the policy was set up. My overall plan was to save a total of at least $7000/mth in various vehicles. With the SEP maxed out at $3000/mth, that left me with needing to put $4000/mth somewhere. Thus, what the MM customer service rep said was either true or he didn't know what the CFP could have managed to structure for me (no policy # with me to give to him to look). I won't be back home until Sunday, otherwise I'd pull out the policy to relay the pertinent details to everyone.

12. And, finally, from Paul, a very profound comment that has made me reassess my views about investing: “b) disgusted with your error and continuing to pay them in an effort to avoid the perception of loss. (Behavioral economics teaches us that avoiding loss is a much more powerful motivator than the realization of gains.)” You are absolutely right and the crux of my need to salvage the $46K is the powerful need to avoid loss. I worked hard to earn that $46K -- as all people, and not just I, do for their money -- and delayed getting a new car in 2014 to keep driving my 19 year old frayed but trustworthy Camry in favor of redirecting that money to bolster my retirement. This is psychological makeup and is going to require a lot more than even excellent forum discussions to get me to overcome. I'm going to have to work on this one.

Oops, it's gotten lengthy. Sorry, Matahari. But it was really 12 responses to 11 people. It couldn't be helped.

And, sorry for the confusion – I suspected I might cause it when I wrote the “he said, she said” scenario. I'm female. :)

More later about what the Vanguard rep told me and what I'm thinking regarding a 1035 exchange.

Again, my deep appreciation to everyone who has replied to help me out. Please don't hold back from telling me more of what you think. I'm just gathering everything together right now and the more information I have, the better an informed action I can make. Must get sleep now...

G'Night (Morning), Bogleheads.

dhodson
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Re: Salvaging help please after Whole Life misrepresentation

Post by dhodson » Sun Jun 14, 2015 1:03 pm

Given your further posting, i am likely right and you have little to no PUAs. Most of us dont consider that a dump in. We call it paying yearly and that is the only way to pay WL in my view bc otherwise there are huge fees. It isnt a discount to pay yearly. Its a fee to pay monthly. Its like buying something on credit card. It costs more to do it that way.

You should complain bc maybe it will help others since maybe the agent will get nervous about doing it to others although i doubt it but id bet there is no way you get your money back. You asked for this garbage. You want protection from the market...well there you go...you now have guarantees. Its that simple for them. You by your own admission want things you really shouldnt want. You likely didnt understand the costs of guarantees or how weak they really are but now you have them. You could have read the contract immediately but didnt. In case it isnt clear ive made my own mistake purchasing this stuff and that is why i now know more about it. would have been nice if i too new before i purchased but i didnt. I figured it out about 3 months later. Ill tell you that in my case the agent made unbelievable claims and even sent them to me via email. At first the insurance company claimed the agent made no such claims. Then i sent his emails and they never responded afterwards. I did complain even up to the state insurance commissioner who sent me a letter stating the agents testimony to them likely wasnt even credible but that they dont have the power to enforce a refund since the regulation of insurance for retirement income isnt covered. They actually even requested a refund but the company said no. I was then left to determine if i wanted to spend the time and energy going to court. I dont think it would have been worth my time personally. Instead i try to educate others now and im sure the industry hates me for it. 8-)

Hunts not going to have a lot of options for you. You really dont need a permanent death benefit and dont seem to even want one. Still its just 100 bucks to get someone who is considered more of an expert to look it over. For the WL you can surrender and move on, 1035 exchange to a low cost annuity to keep your cost basis and thus your gains until back to even are not taxed, or ride the thing out paying yearly taking out a loan against the CSV very late in retirement giving the difference between the death benefit and loan to someone or something. These are almost always setup for low gains. over 80% of surrender WL. If everyone kept their WL then the company probably would go under given the current interest rate environment. They need people to lose money so they can prop up the return for the few that do keep it until death. They invest primarily in bonds but have huge costs/overhead and there isnt any magic in this world.

amalag
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Re: Salvaging help please after Whole Life misrepresentation

Post by amalag » Mon Mar 27, 2017 1:57 pm

What did the author do with this? They seemed to think they were misled. Their salesman/adviser should have made it clear there will not be good returns for many years. People buying cash value life insurance should understand it is something for the long haul. Over a few decades it should give 6-7% returns. Not great, but it is life insurance, not the stock market. If someone wants better they should have gone for alternatives with a higher risk/reward.

The author said he was risk averse and got a vehicle that is for those who are risk averse. Maybe he is most concerned with the low cash value. But again, it is life insurance, if he dies the company will be paying out the death benefit.

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David Jay
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Re: Salvaging help please after Whole Life misrepresentation

Post by David Jay » Mon Mar 27, 2017 3:35 pm

amalag wrote:What did the author do with this? They seemed to think they were misled. Their salesman/adviser should have made it clear there will not be good returns for many years. People buying cash value life insurance should understand it is something for the long haul. Over a few decades it should give 6-7% returns. Not great, but it is life insurance, not the stock market. If someone wants better they should have gone for alternatives with a higher risk/reward.

The author said he was risk averse and got a vehicle that is for those who are risk averse. Maybe he is most concerned with the low cash value. But again, it is life insurance, if he dies the company will be paying out the death benefit.
amalag:

Welcome to the forum, but be careful about commenting on threads that you find with the search function (don't ask me how I know this...).

The post preceding yours is 21 months old. The OP has a total of 13 posts and last posted on this forum on June 13, 2015 (you can see this by clicking on the number "13" in OP's avatar area "Posts: 13". I am pretty certain that you will not get a response from the OP.
Last edited by David Jay on Mon Mar 27, 2017 3:37 pm, edited 1 time in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Pajamas
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Re: Salvaging help please after Whole Life misrepresentation

Post by Pajamas » Mon Mar 27, 2017 4:19 pm

Oh shoot. I just got suckered into reading another zombie thread with a very interesting story that will never have a conclusion. :oops:

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