Should I cancel my whole life policy?

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XDark_FenixX
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Should I cancel my whole life policy?

Postby XDark_FenixX » Wed Apr 19, 2017 4:14 pm

Hi everyone, I am relatively new to this board but spent some time doing the research and organizing my investments. Prior to this I met with a "financial advisor" who sold me 1.4million of whole life insurance and 1.6million of yearly renewable term (with their intention of converting it to whole).

Now I agree, term is definitely better than whole. However, once you've already been sunk into it is it really that much better to leave? I have had my policy for about 2 months now. I spoke with them today and I was told if I were to cancel my policy today, I would only receive $1800. I made an annual payment of $13614 for this whole life policy. I was just going to simply cancel the term policy since I don't need it now, its not level, and its not a competitive rate. Based on what I have seen about whole life my policy doesn't seem great, cash value really only breaks even at like 15 years. I've attached the summary below:
ImageImage

Is it truly the best idea to just cancel it now? I have a hard time swallowing a $12000 loss or so this quickly. Should I maybe get a consult?
Quick summary of situation: single 24 year old, maxing traditional 401k, roth ira, HSA, no dependents
Last edited by XDark_FenixX on Thu Apr 20, 2017 7:30 am, edited 1 time in total.

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bottlecap
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Re: Need help with whole life

Postby bottlecap » Wed Apr 19, 2017 4:23 pm

Sadly, you are going to need to read your policy and maybe even talk to a financial advisor about your options.

Cancelling it is likely the best path, but if there's anyway to get some of your money back, you want to cancel it right.

I would get help immediately in the hopes that the policy or some law in your state might be of help, especially since you've only owned the policy for 2 months.

JT

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corwin
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Re: Need help with whole life

Postby corwin » Wed Apr 19, 2017 4:30 pm

I misread the title as "Need help with MY whole life." I am glad it is only insurance. :happy

XDark_FenixX
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Re: Need help with whole life

Postby XDark_FenixX » Wed Apr 19, 2017 4:30 pm

bottlecap wrote:Sadly, you are going to need to read your policy and maybe even talk to a financial advisor about your options.

Cancelling it is likely the best path, but if there's anyway to get some of your money back, you want to cancel it right.

I would get help immediately in the hopes that the policy or some law in your state might be of help, especially since you've only owned the policy for 2 months.

JT


Any pointers of where I should go for help? Just any CFA or what?

ICMoney
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Re: Need help with whole life

Postby ICMoney » Wed Apr 19, 2017 4:32 pm

OP, you have come to the right place to get some different perspectives on your life insurance policies. It seems like you are doing great saving otherwise - maxing out your retirement accounts and HSA. Good job!

You are age 24 with no dependents - you do not need $3M in life insurance. You certainly do not need whole life insurance, so you should likely cancel the policy and consider the $12K loss a relatively cheap life lesson that you have been fortunate to learn early on. (most of this sunk cost has gone to the "advisor" who sold you this policy as a commission, FYI) Do not continue paying into this policy, you don't need it and it is not worth sinking more money into for years and years until you "break even".

I would caution you against consulting with your "advisor" about canceling, it is in their interest for you to keep it, so they may not provide you with an objective opinion.

Best,
ICM

bloom2708
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Re: Need help with whole life

Postby bloom2708 » Wed Apr 19, 2017 4:41 pm

OP, are you married?

If not, it is approaching the level of ridiculous to have that much life insurance at 24. Like selling winter to me living in North Dakota. :shock:

You buy life insurance to protect your wife and kids, your home, from financial ruin if something happens to you.

A $12k lesson will be hard, but not as hard as paying a lifetime of the premiums. You will get good advice here. Keep filling in the details and asking follow up questions.

I would cancel both policies. You likely don't need anywhere close to $1.6 million in term insurance. The whole life policy is :annoyed
Last edited by bloom2708 on Thu Apr 20, 2017 1:46 pm, edited 2 times in total.
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Re: Need help with whole life

Postby Grt2bOutdoors » Wed Apr 19, 2017 4:51 pm

Think of it this way: you took a trip to Las Vegas, you flew first class, stayed in penthouse suite, had a few drinks, then lost 10 grand on the craps table. Came to your senses and realized you never ever in your lifetime will enter a casino and lose your hard earned money. After all, there are no refunds given at the casino.
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Queue
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Re: Need help with whole life

Postby Queue » Wed Apr 19, 2017 4:54 pm

Since you paid an annual premium, you may want to look into cancelling/cash out after 11 months instead 2 months if there is no detrimental difference.
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XDark_FenixX
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Re: Need help with whole life

Postby XDark_FenixX » Wed Apr 19, 2017 5:11 pm

Queue wrote:Since you paid an annual premium, you may want to look into cancelling/cash out after 11 months instead 2 months if there is no detrimental difference.


That's actually what my "advisors" recommended. I'm not totally sure I can trust them though. I initially called Guardian directly about cancelling and the person on the phone advised me to speak to the salesperson since my policy was so new to see if there was a better way to get out. Sadly the bulk of the meeting was about 2 hours of trying to convince me whole life was better due to retirement spending diversity and tax advantages though.

ThisTimeItsDifferent
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Re: Need help with whole life

Postby ThisTimeItsDifferent » Wed Apr 19, 2017 5:17 pm

Can you at least do a "1035" exchange to some much lower cost investment (like a low cost variable annuity at Vanguard) so at least the 12k loss reduces your basis in that alternative, and almost any alternative investment would better?

Or if you have only had it for 2 months, could you attempt to rescind/revoke/cancel the policy as legally unsuitable or was there any actionable fraud by the seller? Selling you such a policy was de facto certainly unsuitable and likely fraudulent, but maybe not de jure/legally. For a 12k loss, maybe a lawyer could help you revoke it. Maybe the insurance board/commissioner in your state? Just some ideas.

Don't keep it based on the sunk cost fallacy of holding on until it breaks even.

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Re: Need help with whole life

Postby bsteiner » Wed Apr 19, 2017 5:28 pm

XDark_FenixX wrote:... I am relatively new to this board but spent some time doing the research and organizing my investments. Prior to this I met with a "financial advisor" who sold me 1.4 million of whole life insurance and 1.6 million of yearly renewable term (with their intention of converting it to whole) ....


Was he/she a financial advisor or an insurance agent?

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Re: Need help with whole life

Postby LadyGeek » Wed Apr 19, 2017 6:15 pm

This thread is now in the Personal Finance (Not Investing) forum (insurance).
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BL
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Re: Need help with whole life

Postby BL » Wed Apr 19, 2017 6:56 pm

ThisTimeItsDifferent wrote:Can you at least do a "1035" exchange to some much lower cost investment (like a low cost variable annuity at Vanguard) so at least the 12k loss reduces your basis in that alternative, and almost any alternative investment would better?

Or if you have only had it for 2 months, could you attempt to rescind/revoke/cancel the policy as legally unsuitable or was there any actionable fraud by the seller? Selling you such a policy was de facto certainly unsuitable and likely fraudulent, but maybe not de jure/legally. For a 12k loss, maybe a lawyer could help you revoke it. Maybe the insurance board/commissioner in your state? Just some ideas.

Don't keep it based on the sunk cost fallacy of holding on until it breaks even.

Give Vanguard annuities a call about a 1035 exchange to a low-cost annuity to keep until you have gained this money back and can cancel without paying tax on the gain. Don't buy anything from your current guy and get awas ASAP.

Also contact state officer to file a complaint, copy furnished to your current salesman and his company. Maybe do some local complaining, but be honest.

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bottlecap
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Re: Need help with whole life

Postby bottlecap » Wed Apr 19, 2017 7:51 pm

XDark_FenixX wrote:
bottlecap wrote:Sadly, you are going to need to read your policy and maybe even talk to a financial advisor about your options.

Cancelling it is likely the best path, but if there's anyway to get some of your money back, you want to cancel it right.

I would get help immediately in the hopes that the policy or some law in your state might be of help, especially since you've only owned the policy for 2 months.

JT


Any pointers of where I should go for help? Just any CFA or what?


I think you'd be looking for a fee only CFP, but a CFA might do.

It's possible you could read the documentation and figure it out yourself, but there also may be tax implications to be aware of, so if you don't feel comfortable with the global view of things, getting help would be best.

JT

harrychan
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Re: Need help with whole life

Postby harrychan » Wed Apr 19, 2017 8:00 pm

Go to selectquote and check the running rate for term life for someone your age. Then go to a 401k and a traditional ira simulators and see how much you can potentially save and increase your retirement if you put in similar amount of money. Then compare with what you are getting with the whole life. You will get your answer.
This is not legal or certified financial advice but you know that already.

XDark_FenixX
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Re: Need help with whole life

Postby XDark_FenixX » Wed Apr 19, 2017 8:43 pm

ThisTimeItsDifferent wrote:Can you at least do a "1035" exchange to some much lower cost investment (like a low cost variable annuity at Vanguard) so at least the 12k loss reduces your basis in that alternative, and almost any alternative investment would better?

Or if you have only had it for 2 months, could you attempt to rescind/revoke/cancel the policy as legally unsuitable or was there any actionable fraud by the seller? Selling you such a policy was de facto certainly unsuitable and likely fraudulent, but maybe not de jure/legally. For a 12k loss, maybe a lawyer could help you revoke it. Maybe the insurance board/commissioner in your state? Just some ideas.

Don't keep it based on the sunk cost fallacy of holding on until it breaks even.


Hm.... I was wondering that too but I'm not quite sure what that process would be. Would getting a lawyer be greater than having maybe that former underwriter look over the policy to get advice on how to dump it? (Can't remember the guys website). I wouldn't mind putting in complaints but I don't see what that would achieve other than maybe warding some newcomers off

So it sounds transferring to an annuity is the best way to sort of deal with the loss?

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BL
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Re: Need help with whole life

Postby BL » Wed Apr 19, 2017 11:35 pm

Here is a blog I found by a person, Kitces, that has been referred to on Boglehead's for various investing topics. You might pick up a few ideas and consider whether you want to spend the $100 for an analysis by expert Hunt:
https://www.kitces.com/blog/why-cancelling-an-existing-whole-life-or-universal-life-policy-may-be-a-bad-idea/

Note that both whole life and Universal life are discussed.

Maybe you could get the attention of some insurance experts here by changing your title to something like:
Should I cancel my new Whole Life Ins?
Most people, including insurance salesmen, don't really understand these complicated policies. Look at term4sale.com for estimates of term insurance, if you need insurance, and perhaps get one from an independent agent who will shop around for term for you.

I guess surrender value of < $1000 probably is not worth doing a 1035 for, I don't even know their minimum, but it is probably higher. You know that your agent gets much of that amount you lose when you surrender, don't you? Of course he would recommend it to you. He needs it for his new car or perhaps his retirement.

pintail07
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Re: Need help with whole life

Postby pintail07 » Thu Apr 20, 2017 7:31 am

No real need for hiring anyone. Cancel the policy and ask for a refund of unearned premium. They should refund most of the premium. Call them direct, send a certified letter to them and the agent making this request. You might only have to eat a couple thousand dollars if done immediately. You might even tell them you didn't really understand what you bought and they may refund the entire premium. I have seen this work successfully many times.

XDark_FenixX
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Re: Need help with whole life

Postby XDark_FenixX » Thu Apr 20, 2017 7:37 am

BL wrote:Here is a blog I found by a person, Kitces, that has been referred to on Boglehead's for various investing topics. You might pick up a few ideas and consider whether you want to spend the $100 for an analysis by expert Hunt:
https://www.kitces.com/blog/why-cancelling-an-existing-whole-life-or-universal-life-policy-may-be-a-bad-idea/

Note that both whole life and Universal life are discussed.

Maybe you could get the attention of some insurance experts here by changing your title to something like:
Should I cancel my new Whole Life Ins?
Most people, including insurance salesmen, don't really understand these complicated policies. Look at term4sale.com for estimates of term insurance, if you need insurance, and perhaps get one from an independent agent who will shop around for term for you.

I guess surrender value of < $1000 probably is not worth doing a 1035 for, I don't even know their minimum, but it is probably higher. You know that your agent gets much of that amount you lose when you surrender, don't you? Of course he would recommend it to you. He needs it for his new car or perhaps his retirement.


Appreciate the advice. I've changed the title to hopefully get more opinions. At this point I've sort of been looking at it as a way of transferring inheritance wealth now and it doesn't seem horrible in that sense. I am very strongly considering hiring Mr. Hunt since I don't think I have a good policy though. Would his advice just compare policies or provide a way to fix a policy internally?

I do recognize he gets the surrender cost, but he does get the bulk of the first annual premium payment too so it's almost the same.

pintail07 wrote:No real need for hiring anyone. Cancel the policy and ask for a refund of unearned premium. They should refund most of the premium. Call them direct, send a certified letter to them and the agent making this request. You might only have to eat a couple thousand dollars if done immediately. You might even tell them you didn't really understand what you bought and they may refund the entire premium. I have seen this work successfully many times.


I just tried calling Guardian again and got the same response, to speak to my insurance agent since cancelling directly from the call center would only yield the cash value (about 1800 like I've mentioned). I have already met with them and they weren't helpful at all. Can I really expect a different response via certified letter?

pintail07
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Re: Should I cancel my whole life policy?

Postby pintail07 » Thu Apr 20, 2017 8:38 am

Absolutely. Send a certified letter to the agent and the company telling them to cancel the policy effective immediately and refund all unearned premium. I would not recommend getting into a discussion with the agent, he will do everything possible to change your mind and keep from being charged back his commission of up to 10,000. Document everything and I might even find out who his manager is and send him a copy of the letter. Everyone will try to change your mind but be steadfast. Trust me, they will refund a portion or all of the premium. Whole Life is the bread and butter of Guardian and that is what their agents push, and many are very successful. Keep us informed if you take this path and if you need further assistance.

XDark_FenixX
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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Thu Apr 20, 2017 9:13 am

pintail07 wrote:Absolutely. Send a certified letter to the agent and the company telling them to cancel the policy effective immediately and refund all unearned premium. I would not recommend getting into a discussion with the agent, he will do everything possible to change your mind and keep from being charged back his commission of up to 10,000. Document everything and I might even find out who his manager is and send him a copy of the letter. Everyone will try to change your mind but be steadfast. Trust me, they will refund a portion or all of the premium. Whole Life is the bread and butter of Guardian and that is what their agents push, and many are very successful. Keep us informed if you take this path and if you need further assistance.


Hm..... I will try that today/tomorrow. I quickly glanced at PA code 73.127 and it appears i should be entitled to a refund of unearned premium (http://www.pacode.com/secure/data/031/c ... 3.127.html). I sent my agent a text stating the fact and we'll see if he gets it started. If not, I will send the certified letters.

Dottie57
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Re: Should I cancel my whole life policy?

Postby Dottie57 » Thu Apr 20, 2017 9:20 am

XDark_FenixX wrote:
pintail07 wrote:Absolutely. Send a certified letter to the agent and the company telling them to cancel the policy effective immediately and refund all unearned premium. I would not recommend getting into a discussion with the agent, he will do everything possible to change your mind and keep from being charged back his commission of up to 10,000. Document everything and I might even find out who his manager is and send him a copy of the letter. Everyone will try to change your mind but be steadfast. Trust me, they will refund a portion or all of the premium. Whole Life is the bread and butter of Guardian and that is what their agents push, and many are very successful. Keep us informed if you take this path and if you need further assistance.


Hm..... I will try that today/tomorrow. I quickly glanced at PA code 73.127 and it appears i should be entitled to a refund of unearned premium (http://www.pacode.com/secure/data/031/c ... 3.127.html). I sent my agent a text stating the fact and we'll see if he gets it started. If not, I will send the certified letters.



He doesn't want to lose the commission. Send him the letter today.

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Re: Should I cancel my whole life policy?

Postby LarryAllen » Thu Apr 20, 2017 10:17 am

What was the justification for the policy? It might make sense if you had kids and were looking for estate tax planning (if owned in an ILIT) which is not the case. Or it might make sense (arguable but at least debateable) if you are high wage earner looking for another tax deferred investment vehicle. However, the odds are it was slightly inappropriate at best. Maybe best to sue agent, and Guardian, in small claims court for selling an inappropriate investment!? It's too small for any attorney to take (I would think) but might be worth your time to go to small claims court!?

pintail07
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Re: Should I cancel my whole life policy?

Postby pintail07 » Thu Apr 20, 2017 11:24 am

When was the policy delivered to you and you signed the delivery document? You might still be in the free look period. In any case you were absolutely an unsuitable candidate for the agents recommendation. If Guardian understands this and you respond that you might seek additional help in resolving the issue. Bet a hundred you will get ALL the premium back. Do not talk with the agent again. If you use email use a app like readnotify to certify delivery of email.

Nearly A Moose
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Re: Should I cancel my whole life policy?

Postby Nearly A Moose » Thu Apr 20, 2017 11:45 am

I feel for you. I was sold one of these things (luckily half the death benefit and half the premium) a few years ago. I'm struggling with what to do it with it (and will probably post my own policy sometime this year), but that's in part because I'm somewhat closer to the breakeven period (but still not that close). I certainly would not have bought it knowing what I know now.

If you're worried about eating a $12,000 loss, just think about the loss you'd be eating if you canceled it in year 7, for example (~$18,000 based on your illustration), plus all of the opportunity cost of tying up that money for so many years). And you'd have to pay $190,000 over 15 years just for the thing to break even.

If you haven't already, I'd suggest reading the White Coat Investor's blog. He's an ER doc and part time blogger (more the reverse now it seems), and he writes extensively on issues that are relevant to high earners, which I infer applies to you. He has a number of posts that I've found very helpful for understanding Whole Life policies, including this post on how to get out of one: http://whitecoatinvestor.com/how-to-dum ... fe-policy/, and this post about how to evaluate one: http://whitecoatinvestor.com/how-to-eva ... fe-policy/.

I'm not familiar with the unearned premium law people are referencing, but it wouldn't hurt to track it down. You might even post a new thread asking about that specifically and referencing PA so that relevant folks will look at it. But if that doesn't work, I'd encourage you to learn about how a 1035 exchange works. You essentially convert your whole life policy into an annuity, and then you can decide to either (a) cash out the annuity and claim a loss on your taxes (Which you can't do for insurance), or (b) let it grow tax free until it breaks even, then cash it out in a tax-neutral manner. If your income is as high as I'm guessing based on these policies, you might decide it's better to claim a $12,000 loss today and invest the marginal tax savings rather than letting ~$1,000 sit in an annuity until it breaks even, which will take some amount of time.

In any event, it doesn't seem like it's worth hiring a third party to address this, unless you want to try Hunt's service for $100. I certainly wouldn't pay to get a lawyer involved (and I'm a lawyer). Keep this thread active for a bit and some of the forum's insurance gurus will come around.

XDark_FenixX
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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Thu Apr 20, 2017 2:13 pm

pintail07 wrote:When was the policy delivered to you and you signed the delivery document? You might still be in the free look period. In any case you were absolutely an unsuitable candidate for the agents recommendation. If Guardian understands this and you respond that you might seek additional help in resolving the issue. Bet a hundred you will get ALL the premium back. Do not talk with the agent again. If you use email use a app like readnotify to certify delivery of email.


The policy was delivered and signed on February 7th. The first page of the policy says the free look period is only 10 days so I'm under the impression I'm probably not. The agent responded with simply the following:
Sorry I cannot help you any further... We will also be terminating your investment accounts.

Any disputes you have moving forward you can send to ilsolutions@glic.com.

The investment accounts were horrible ones from netxinvestor with horrible fees and whatnot that I decided to never fund so that's good. I sent a message to the email he provided (it's guardian life's email) briefly asking them for help with cancelling my policy. I agree, it seems like the agent simply won't help and will be useless to contact. However, each time I've called guardian they've told me to contact the agent since they can only process a surrender with return of the cash value. They specifically recommended I do that since the policy was so new and the agent might have a way of extending the free look period or find some other way to return more of the premium. I have a feeling you are right that I can get the whole premium back but I'm just not seeing how. I think I'll draft a certified letter to send to guardian but I'd honestly prefer being able to talk to someone and iron this out. Is there any other method of doing this that you would recommend? It's really a shame their call center claims they can't do anything.

Nearly A Moose wrote:I feel for you. I was sold one of these things (luckily half the death benefit and half the premium) a few years ago. I'm struggling with what to do it with it (and will probably post my own policy sometime this year), but that's in part because I'm somewhat closer to the breakeven period (but still not that close). I certainly would not have bought it knowing what I know now.

If you're worried about eating a $12,000 loss, just think about the loss you'd be eating if you canceled it in year 7, for example (~$18,000 based on your illustration), plus all of the opportunity cost of tying up that money for so many years). And you'd have to pay $190,000 over 15 years just for the thing to break even.

If you haven't already, I'd suggest reading the White Coat Investor's blog. He's an ER doc and part time blogger (more the reverse now it seems), and he writes extensively on issues that are relevant to high earners, which I infer applies to you. He has a number of posts that I've found very helpful for understanding Whole Life policies, including this post on how to get out of one: http://whitecoatinvestor.com/how-to-dum ... fe-policy/, and this post about how to evaluate one: http://whitecoatinvestor.com/how-to-eva ... fe-policy/.

I'm not familiar with the unearned premium law people are referencing, but it wouldn't hurt to track it down. You might even post a new thread asking about that specifically and referencing PA so that relevant folks will look at it. But if that doesn't work, I'd encourage you to learn about how a 1035 exchange works. You essentially convert your whole life policy into an annuity, and then you can decide to either (a) cash out the annuity and claim a loss on your taxes (Which you can't do for insurance), or (b) let it grow tax free until it breaks even, then cash it out in a tax-neutral manner. If your income is as high as I'm guessing based on these policies, you might decide it's better to claim a $12,000 loss today and invest the marginal tax savings rather than letting ~$1,000 sit in an annuity until it breaks even, which will take some amount of time.

In any event, it doesn't seem like it's worth hiring a third party to address this, unless you want to try Hunt's service for $100. I certainly wouldn't pay to get a lawyer involved (and I'm a lawyer). Keep this thread active for a bit and some of the forum's insurance gurus will come around.


Thank you so much for your sympathies and input. I initially didn't know how to approach this since it's a very new policy and it seems like the advice from whitecoatinvestor applied to policies in force longer. So without much other recourse I figured I'd simply lay it all out and ask since I really don't know how to navigate through this. Perhaps you should do the same sometime.

The refund of unearned premiums law I pulled from here: http://www.pacode.com/secure/data/031/c ... 3.127.html

Sadly I'm not a lawyer(I'm a pharmacist) so I'm not quite sure what it entails. I'm also unsure how to utilize it in this scenario since the agent just doesn't seem to care and guardian just keeps telling me to speak to my agent so he can utilize such laws and policies. I was sort of hoping Mr. Hunt might be able to help me through but I'm not confident he can so I might forgo that for now and see who else can chime in.

LarryAllen wrote:What was the justification for the policy? It might make sense if you had kids and were looking for estate tax planning (if owned in an ILIT) which is not the case. Or it might make sense (arguable but at least debateable) if you are high wage earner looking for another tax deferred investment vehicle. However, the odds are it was slightly inappropriate at best. Maybe best to sue agent, and Guardian, in small claims court for selling an inappropriate investment!? It's too small for any attorney to take (I would think) but might be worth your time to go to small claims court!?


So this insurance agent advertises himself as a "financial planner." I met with him to get my investments in order and what they first did was pitch whole life as a way of protecting income, providing for your family, and tax-free investment. I didn't know better so I ate it all up since my father was in the hospital and I was worried his passing could negatively impact my health rating for future health insurance. Even factoring that in, I still don't think whole life is appropriate/a good policy. I'd honestly prefer to avoid court but I really don't know what my options are at this point
Last edited by XDark_FenixX on Thu Apr 20, 2017 2:27 pm, edited 1 time in total.

pintail07
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Re: Should I cancel my whole life policy?

Postby pintail07 » Thu Apr 20, 2017 2:25 pm

You really need to find out which office he works out of and try to reach the general manager. I will help guide you if you want at no charge, send me a PM.

mohawk234
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Re: Should I cancel my whole life policy?

Postby mohawk234 » Thu Apr 20, 2017 3:56 pm

Disclosure: I like several aspects of whole life policies sold by mutual life companies. I don't work for one, I don't sell insurance, and nobody I know or am related to is in the insurance business. However, at age 50 I am very glad my father bought a policy for me when I turned 20 and glad I purchased my own about five years later. I own policies from The Guardian.

Here are some things I like: when my level term expires in ten years I will still own these whole life policies. This gives me confidence and comfort knowing that the death benefit, which has grown and will continue to grow significantly, will be there for my wife, my children, and my grand children. Another thing: I have easy access to the cash value now or in the future. In fact, I've used part of the cash value a few times along the way. Another thing: I never thought of my policies as investments. My dad explained my first policy as a foundation, and from where I sit today it's always been that way. I have a Roth and a 401k as well. The biggest difference is that I know the minimum value of my whole life policies today and every year that I'm alive up to age 95. I can't say the same is true for my retirement accounts. I believe that they will perform, but that's far different than a guarantee.

I really don't know if that policy of yours is the right thing for you. It looks like your agent either rushed you or didn't explain it all clearly enough. But it sure looks like the 13k premium isn't a stretch for you given that you had investment accounts planned.

I suggest taking a deep breath. Give this policy some time, and give yourself some time to learn about whole life. You might, like myself, be happy that you bought this a short 25 years from now. Heck, based on your illustration, it looks like you will be done paying premiums if you choose in year 7.

Good luck.

XDark_FenixX
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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Thu Apr 20, 2017 8:08 pm

pintail07 wrote:You really need to find out which office he works out of and try to reach the general manager. I will help guide you if you want at no charge, send me a PM.


Sent you a PM, I very much appreciate the help! I filed a BBB complaint too.

mohawk234 wrote:Disclosure: I like several aspects of whole life policies sold by mutual life companies. I don't work for one, I don't sell insurance, and nobody I know or am related to is in the insurance business. However, at age 50 I am very glad my father bought a policy for me when I turned 20 and glad I purchased my own about five years later. I own policies from The Guardian.

Here are some things I like: when my level term expires in ten years I will still own these whole life policies. This gives me confidence and comfort knowing that the death benefit, which has grown and will continue to grow significantly, will be there for my wife, my children, and my grand children. Another thing: I have easy access to the cash value now or in the future. In fact, I've used part of the cash value a few times along the way. Another thing: I never thought of my policies as investments. My dad explained my first policy as a foundation, and from where I sit today it's always been that way. I have a Roth and a 401k as well. The biggest difference is that I know the minimum value of my whole life policies today and every year that I'm alive up to age 95. I can't say the same is true for my retirement accounts. I believe that they will perform, but that's far different than a guarantee.

I really don't know if that policy of yours is the right thing for you. It looks like your agent either rushed you or didn't explain it all clearly enough. But it sure looks like the 13k premium isn't a stretch for you given that you had investment accounts planned.

I suggest taking a deep breath. Give this policy some time, and give yourself some time to learn about whole life. You might, like myself, be happy that you bought this a short 25 years from now. Heck, based on your illustration, it looks like you will be done paying premiums if you choose in year 7.

Good luck.


I think you're giving them a lot more credit than they deserve. They did not set up any retirement accounts, I did. Their financial "plan" was to put all my money into whole life and a taxable account contributing only up to match on my 401k. The advice here, which I have to agree, is that they simply wanted to handle all my money to maximize their commissions. If they actually made IRAs and whatnot I probably would have just followed their advice and never been wiser. It was only when they told me to give them all my money to invest in a taxable account did I start recognizing the red flags.

Honestly, if it wasn't such a massive amount of whole life I could probably come to terms with it. But $13.6k a year is a ton. I'm guessing your premium isn't that much?

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Re: Should I cancel my whole life policy?

Postby ncbill » Thu Apr 20, 2017 9:33 pm

Could you define significantly?

I have a relative whose parent took out a $500,000 whole life policy on them in 1984, and their death benefit has grown, but currently is only around $650,000 (dividends were not used to offset the annual premium)

mohawk234 wrote:the death benefit, which has grown and will continue to grow significantly,

BenD
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Re: Should I cancel my whole life policy?

Postby BenD » Thu Apr 20, 2017 10:01 pm

So sorry to hear about this. I am a advisor but I only sell term. Whole life usually only makes sense in estate planning. Since you paid an annual premium you should be able to get back the pro-rated premium for the year. That's usually how it works at most of the companies I've seen. It does depend on the contract however and the free look period usually only lasts 30 days or so. I have seen companies allow you to get out though. If I were you, I would send a "scary letter" that is basically a bluff. That means a certified letter to their legal department from an attorney that basically says you are going to sue them if they don't let you out of the contract and refund ALL of your premium within 30 days of receiving the letter. You should come up with some damages that are above the premium you paid that way they'll fear they'll lose more. A lawyer may charge you $200-400 so that could be a waste of money. However if it works it would be a victory and you'd get all your money back. I've heard of annuity companies letting people out of stuff when a bad agent sold some things they shouldn't have. If the letter doesn't work I'd simply surrender it quickly and move on with life. It's better for sour grapes to be short term in your life. You did the best you could with what you knew at the time. You're obviously a successful pharmacist and are making some good income. You can be happy knowing this stupid agent will be getting a chargeback and won't be making any money on the policy. You have to keep it for 1 year for the agent to keep the money.

mohawk234
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Re: Should I cancel my whole life policy?

Postby mohawk234 » Thu Apr 20, 2017 10:35 pm

ncbill wrote:Could you define significantly?

I have a relative whose parent took out a $500,000 whole life policy on them in 1984, and their death benefit has grown, but currently is only around $650,000 (dividends were not used to offset the annual premium)

mohawk234 wrote:the death benefit, which has grown and will continue to grow significantly,


It's a relative term. Or are you implying that $150k isn't significant? I can't tell from your question. I'll say that I think $150k is significant, but it also may pale in comparison to many other examples. I only am familiar with my own policies. I've never seen anybody else's policy statements. In my 30 year old policy my DB has almost doubled. That is significant I think. It's one of the reasons I'm happy that I own it.

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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Thu Apr 20, 2017 10:46 pm

mohawk234 wrote:
ncbill wrote:Could you define significantly?

I have a relative whose parent took out a $500,000 whole life policy on them in 1984, and their death benefit has grown, but currently is only around $650,000 (dividends were not used to offset the annual premium)

mohawk234 wrote:the death benefit, which has grown and will continue to grow significantly,


It's a relative term. Or are you implying that $150k isn't significant? I can't tell from your question. I'll say that I think $150k is significant, but it also may pale in comparison to many other examples. I only am familiar with my own policies. I've never seen anybody else's policy statements. In my 30 year old policy my DB has almost doubled. That is significant I think. It's one of the reasons I'm happy that I own it.


Death benefit doubled in 30 years? You have an abnormally good policy then. If mine did I'd keep it. At best mine would go up 36% in that time

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BL
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Re: Should I cancel my whole life policy?

Postby BL » Thu Apr 20, 2017 11:56 pm

OP, I hope you have gotten some ideas here that may help you decide what to do with this.

I think it is important to consider that those of us who comment are basically just anonymous folks, both to you and to each other, and are by no means experts on this or most subjects. Most of us have your best interests at heart, but there could easily be some who have other motives, especially with this subject. So I suggest you take each idea with healthy skepticism, just like you should with anyone who tries to sell you something you don't need or understand. I tend to expect good suggestions from some who have been on Boglehead's for several years and have made quite a lot of suggestions. This shows up on my desktop, but on laptop or phone I have to click on the writer's name or handle to get this information.

Good luck!

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Re: Should I cancel my whole life policy?

Postby Nate79 » Fri Apr 21, 2017 12:25 am

There is a reason WL subject has a sticky at the top of this section.

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BL
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Re: Should I cancel my whole life policy?

Postby BL » Fri Apr 21, 2017 12:57 am

Nate79 wrote:There is a reason WL subject has a sticky at the top of this section.

Thanks for the reminder as I had forgotten about it. OP, you might want to read through it, just remember there is at least one salesman defending WL in the thread.
https://www.bogleheads.org/forum/viewtopic.php?f=2&t=57154

2comma
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Re: Should I cancel my whole life policy?

Postby 2comma » Fri Apr 21, 2017 1:30 am

mohawk234 wrote:
ncbill wrote:Could you define significantly?

I have a relative whose parent took out a $500,000 whole life policy on them in 1984, and their death benefit has grown, but currently is only around $650,000 (dividends were not used to offset the annual premium)

mohawk234 wrote:the death benefit, which has grown and will continue to grow significantly,


It's a relative term. Or are you implying that $150k isn't significant? I can't tell from your question. I'll say that I think $150k is significant, but it also may pale in comparison to many other examples. I only am familiar with my own policies. I've never seen anybody else's policy statements. In my 30 year old policy my DB has almost doubled. That is significant I think. It's one of the reasons I'm happy that I own it.


Using the rule of 72 that is around a 2.4% increase over 30 years, just barely keeping pace with inflation and that is only for the death benefit. If you compare that to an investment (which you or your heirs benefit from) or to a term life policy (which only your heirs benefits from) I just don't see how this is a good use of money for the consumer.
If I am stupid I will pay.

MrsBDG
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Re: Should I cancel my whole life policy?

Postby MrsBDG » Fri Apr 21, 2017 2:20 am

I agree with the above posters, consult Term4Sale.com, they are not agents, but they will give you the names of three agents who work in your zip code.

It sounds like the free look refund is not an option, in my experience, companies do refund unearned premium, though it might be prorated based on the policy date, if your policy date is the 15th of the month, they might refund as of the 15th of May.

Generally the person with whom you are speaking on the phone is not experienced enough to deal properly with an unusual situation, ask to be escalated to a supervisor.

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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Fri Apr 21, 2017 2:11 pm

BenD wrote:So sorry to hear about this. I am a advisor but I only sell term. Whole life usually only makes sense in estate planning. Since you paid an annual premium you should be able to get back the pro-rated premium for the year. That's usually how it works at most of the companies I've seen. It does depend on the contract however and the free look period usually only lasts 30 days or so. I have seen companies allow you to get out though. If I were you, I would send a "scary letter" that is basically a bluff. That means a certified letter to their legal department from an attorney that basically says you are going to sue them if they don't let you out of the contract and refund ALL of your premium within 30 days of receiving the letter. You should come up with some damages that are above the premium you paid that way they'll fear they'll lose more. A lawyer may charge you $200-400 so that could be a waste of money. However if it works it would be a victory and you'd get all your money back. I've heard of annuity companies letting people out of stuff when a bad agent sold some things they shouldn't have. If the letter doesn't work I'd simply surrender it quickly and move on with life. It's better for sour grapes to be short term in your life. You did the best you could with what you knew at the time. You're obviously a successful pharmacist and are making some good income. You can be happy knowing this stupid agent will be getting a chargeback and won't be making any money on the policy. You have to keep it for 1 year for the agent to keep the money.


On some level I think that's sort of the plan? I think I'll be sending letters to guardian asking for assistance. Worst case scenario, I'll at least get back my unearned premium. I'll definitely provide updates on how this goes! I'll probably be passing on life insurance altogether till I have a family.

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Re: Should I cancel my whole life policy?

Postby mhalley » Fri Apr 21, 2017 2:44 pm

Single with no dependants generally means there is no need for life insurance at all, certainly not 3 million $. I think this financial "advisor" is almost a crook. I wonder if he should be reported to the state insurance board.
As to keeping with because of sunken costs, I don't think that happens until at least 10 years in.

XDark_FenixX
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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Fri Apr 21, 2017 8:16 pm

mhalley wrote:Single with no dependants generally means there is no need for life insurance at all, certainly not 3 million $. I think this financial "advisor" is almost a crook. I wonder if he should be reported to the state insurance board.
As to keeping with because of sunken costs, I don't think that happens until at least 10 years in.


I'm actually considering putting in a complaint with the state insurance board. Do you think they could help get me a full refund? If so I'm definitely game for doing that too

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Re: Should I cancel my whole life policy?

Postby hollowcave2 » Fri Apr 21, 2017 8:57 pm

Do NOT cancel this policy on your own and eat the $12K loss. Check with your state insurance board first. There may be a grace period since you only bought the policy 2 months ago. It may be possible to still get out of it.

But even so, this is not as bad as it sounds. There are benefits of whole life insurance that you can use. However, if you do not have any dependents, it seems like a lot of insurance. The advisor may have been thinking about borrowing against this policy later or taking distributions tax free once the cash value builds up. And whole life does not expire. So it is not as bad as it seems. You can go back to this advisor and ask him about these questions. It must have had some benefits to you, otherwise you would not have bought it. But if it was a pressure sell to you, you may still have some recourse. Check out any grace period with the state insurance board right away.

The problem with whole life is the expensive fees and typically has mediocre investment options. Getting whole life isn't bad in itself; you just need to assess your situation. If you didn't have whole life and get term instead, you still have to invest for the future yourself. The argument of "buy term and invest the difference" has some merit, but you need to invest the difference. If you don't then you'll end up with no insurance and not much savings when you would need it most. The downside of buying term is that eventually, that option gets too expensive to continue and you need to self-insure. So that has to be the alternate plan.

Let us know how you do.

Steve

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Re: Should I cancel my whole life policy?

Postby Spyder59 » Sat Apr 22, 2017 7:08 am

It appears from the facts you have shared that this sale is unsuitable and should be rescinded with a full return of your premium paid. Remember, the principal purpose of buying life insurance is that you need the life insurance. In your case, especially with the lack of dependents, it would be hard to justify this amount of life insurance, especially whole life insurance. What to do?

First, make sure you gather and review all your documentation related to the sale, including a copy of the application (which should be attached to the policy). Check for any inaccuracies, such as the agent misstating the purpose of the purchase or an illustration which includes facts that are incorrrect or assumptions that you feel are unreasonable. If it was me, I would write a statement setting forth the key statements and representations that were made in connection with the sale, while the facts are still fresh in your mind.

Next, contact the company and request to speak with a supervisor. Tell them you have a complaint. Set forth your facts and explain why you believe this is an unsuitable sale, and that you want the policy rescinded with your premium refunded. Tell me that if the policy is not rescinded, you will file a formal complaint with the insurance department against the company and the agent. I would also ask the supervisor if the company has a "suitability" committee or panel that can review whether the sale was appropriate and meets the company's internal sales guidelines.

Next, contact your insurance department. I would first call and ask to speak with the insurance consumer complaint administrator or chief. Explain your situation and ask if there are any key issues that will be of interest to the regulator in helping you with your complaint. I would also ask if the department or the NAIC (National Association of Insurance Commissioners) have done any "market conduct" investigations of the company or taken any administrative actions against the company or agent and ask how you obtain copies (such investigations or actions usually are public record once finalized). You may want to google for class action lawsuits against the company because of unsuitable sales. Your complaint should be against both the company and the agent (some states will open separate complaint files, in any case, you certainly want separate responses from each party to your complaint). It is very important to take the time to write a thorough complaint that sets out your facts, what happened in connection with the sale and why you feel the contract should be rescinded.

Last, I suggest you be organized, be persistent and do not hesitate to go up the ladder and/or be the "squeaky wheel" if you feel you are not getting a substantive or timely response. I would memorialize all oral communications in writing and keep a log of your contacts with all parties. Insurance departments are often understaffed and it may be necessary advocate for your complaint in order to get a timely response from a qualified insurance expert at the department. The tactics of some insurance companies is to delay and be unresponsive in the hope that the regulator and the consumer will give up. Insurance complaints can take a lot of time as you have to wait for the complaint to get submitted by the department, the company to respond to the department, the insurance department to review the response and get back to you, and you may well need to respond in kind to the department. Don't give up, persistence is essential. Good luck!

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Re: Should I cancel my whole life policy?

Postby inbox788 » Sat Apr 22, 2017 10:25 am

hollowcave2 wrote:The advisor may have been thinking about borrowing against this policy later or taking distributions tax free once the cash value builds up. And whole life does not expire. So it is not as bad as it seems. You can go back to this advisor and ask him about these questions. It must have had some benefits to you, otherwise you would not have bought it. But if it was a pressure sell to you, you may still have some recourse. Check out any grace period with the state insurance board right away.


OP should probably cancel the policy and try to get back as much of the premium as he can.

Side discussion on borrowing against life insurance. Realize there are many pitfalls and understand what it involves. Now, what is the interest rate on borrowing? Many older policies carried a fixed rate of 6% or 8% and in the current interest rate environment, isn't all that useful. But if the rate is low and locked in, and if the rates go up, then there might be an incentive to borrow against it, even if it just to get some cash out. And there is the issue of whether a loan counts against your policy dividends and returns or who receives the interest on the loan. There are terms regarding these that I don't recall, but finer points that make big differences whether you should or should not borrow.

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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Tue May 23, 2017 12:10 pm

updates:
So I did send the letters to the "financial group", BBB, State insurance board, and Guardian.

Guardian has been "reviewing" my complaint for almost a month now and don't seem to have much with regards to updates or progress. The financial group forwarded my letter to Guardian and responded to the BBB complaint basically saying they are just agents and can't do anything about (also that the policy was appropriate). They also claimed that I am not entitled to a prorated refund. State insurance board is still waiting for a reply from Guardian.

Any thoughts on what I should do with regards to next steps? Just keep waiting it out? Any direction would be appreciated.

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Re: Should I cancel my whole life policy?

Postby Benton Bair » Wed May 24, 2017 3:01 am

If this life insurance policy was purchased in Pennsylvania as you implied by referencing the PA Code you will be eligible for a prorated return of unearned premium. The PA Insurance Department's Consumer Affairs section will confirm your right - call the Department. Guardian's review may likely result in a full refund because the agent seems to not have acted in good faith when you requested cancellation and you were told he could not do anything for you. His was an inaccurate statement. I expect you will receive just treatment by Guardian. Best wishes.

trixie449
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Re: Should I cancel my whole life policy?

Postby trixie449 » Wed May 24, 2017 6:52 pm

XDark - did you get it squared away yet? What was the ultimate outcome?

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BL
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Re: Should I cancel my whole life policy?

Postby BL » Thu May 25, 2017 9:16 am

On the rare chance that you should get some pro-rated rebate, remember that each month you keep it, you are losing 1/12 th of a year's contribution. Sometimes it is best to cut your losses, but I don't know the answer. It might make more sense to take the loss and get on with your life. Did you talk to Vanguard annuities about how to do a 1035 exchange and if that would make sense? Once you have the cash in hand, that may not be an option anyway; perhaps you would need to have it sent directly in order to do a 1035 exchange.

XDark_FenixX
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Re: Should I cancel my whole life policy?

Postby XDark_FenixX » Thu May 25, 2017 9:24 am

Benton Bair wrote:If this life insurance policy was purchased in Pennsylvania as you implied by referencing the PA Code you will be eligible for a prorated return of unearned premium. The PA Insurance Department's Consumer Affairs section will confirm your right - call the Department. Guardian's review may likely result in a full refund because the agent seems to not have acted in good faith when you requested cancellation and you were told he could not do anything for you. His was an inaccurate statement. I expect you will receive just treatment by Guardian. Best wishes.


Thank you for your reassurances. I'm just very tired of this waiting game with Guardian and the State insurance board. I just feel very disgusted with the financial group/agency's response (basically that they did not do anything wrong and that the law I cited is for credit life insurance only) since they were the only ones to actually reply back so far.

trixie449 wrote:XDark - did you get it squared away yet? What was the ultimate outcome?


Unfortunately no. I'm basically just waiting. I'm not sure what the outcome will be or what I should do. I'm sure there is a law somewhere that at minimal would entitle me to unearned premiums but i'm not a lawyer and I'm hoping the State Board would at least ensure I get that much. But really it seems like I'm my basically my own advocate.

BL wrote:On the rare chance that you should get some pro-rated rebate, remember that each month you keep it, you are losing 1/12 th of a year's contribution. Sometimes it is best to cut your losses, but I don't know the answer. It might make more sense to take the loss and get on with your life. Did you talk to Vanguard annuities about how to do a 1035 exchange and if that would make sense? Once you have the cash in hand, that may not be an option anyway; perhaps you would need to have it sent directly in order to do a 1035 exchange.


I agree that keeping it even just 1 month longer is a loss for me but I really don't know what other options I have other than to wait and see what the complaint outcome is. I have not looked into the annuities exchange yet because I don't think it would make sense at this point. I believe/hope that I should be able to achieve a greater return than $1300 or so out of a $14000 payment and I think you're right if I actually get any amount greater than the surrender value back 1035 exchange probably won't be an option.

gr7070
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Re: Should I cancel my whole life policy?

Postby gr7070 » Thu May 25, 2017 1:02 pm

XDark_FenixX wrote: But really it seems like I'm my basically my own advocate..


That's because you are/should be. No one will care more about your own plight than you. You're almost/mostly your only advocate in this situation.

XDark_FenixX wrote:I'm just very tired of this waiting game with Guardian and the State insurance board. I just feel very disgusted with the financial group/agency's response...

...basically just waiting. I'm not sure what the outcome will be or what I should do. ... I'm hoping the State Board would at least ensure I get that much.


When I read this thread late last night, based upon your handful of posts I was left with the perception that you're doing plenty of waiting on others. And that was formed before I read today's post.

I'm sure that's in part only perception on my part. However, especially so now a month + removed from the initial posts, I'd be seriously stepping up my actions.

Have you called and *spoken with* your agents manager? What actions were they going to take and get back with you?
Have you spoken to the manager's manager? Give up to Branch manager? Regional manager? Their corporate ethics manager?

Have you gotten updates from the state insurance board? Do they have a timeline for any actions in your case?

I'd be chasing my $14k from a bunch of different angles and I'd be persistent. I'd be mostly courteous and professional, but I'd get the message across that you aren't going away till this is resolved appropriately.

XDark_FenixX wrote:I agree that keeping it even just 1 month longer is a loss for me ... see what the complaint outcome is. I have not looked into the annuities exchange yet because I don't think it would make sense at this point. I believe/hope that I should be able to achieve a greater return than $1300 or so out of a $14000 payment and I think you're right if I actually get any amount greater than the surrender value back 1035 exchange probably won't be an option.


I would think you are correct to "wait" for a resolution before considering the 1035.

Just don't spend much of that time truly waiting yourself. Everyone else in this situation can wait indefinitely with no negative effects. Everyone but you.


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