Should my wife and I cancel our Whole Life Insurance policies?

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TheHCInvestor
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Joined: Tue May 28, 2019 9:07 pm

Should my wife and I cancel our Whole Life Insurance policies?

Post by TheHCInvestor » Thu May 30, 2019 7:50 pm

My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor and we are thinking we may have made a mistake. I am 31, she is 35 and we just had our first child earlier this year. Together, our pre-tax income is at $153k. My premium is $9k per year while hers is around $6k. We already have 20-year term life insurance. A big part of our why we bought into WL was to save for our child's college education. After doing more research now I feel pretty embarassed about that.

Would it be best to just cut our losses at this point, chalk this up to an expensive lesson, and invest our money for college savings into something else like a 529? Our combined surrender value is less than $1k, but I was told it may be possible to recover some of the unearned premiums.

indexfund56
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by indexfund56 » Thu May 30, 2019 8:36 pm

TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor and we are thinking we may have made a mistake. I am 31, she is 35 and we just had our first child earlier this year. Together, our pre-tax income is at $153k. My premium is $9k per year while hers is around $6k. We already have 20-year term life insurance. A big part of our why we bought into WL was to save for our child's college education. After doing more research now I feel pretty embarassed about that.

Would it be best to just cut our losses at this point, chalk this up to an expensive lesson, and invest our money for college savings into something else like a 529? Our combined surrender value is less than $1k, but I was told it may be possible to recover some of the unearned premiums.
Yes, I would cancel immediately and consider it a lesson learned.

livesoft
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by livesoft » Thu May 30, 2019 8:36 pm

Yes. Definitely.
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marcopolo
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by marcopolo » Thu May 30, 2019 8:38 pm

Hopefully, a part of your lesson learned should be to fire your financial advisor.
Once in a while you get shown the light, in the strangest of places if you look at it right.

bayview
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by bayview » Thu May 30, 2019 8:45 pm

Welcome to the forums!

Did you see this stickied post at the top of the board?

viewtopic.php?f=2&t=57154
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

Topic Author
TheHCInvestor
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Joined: Tue May 28, 2019 9:07 pm

Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by TheHCInvestor » Thu May 30, 2019 8:49 pm

bayview wrote:
Thu May 30, 2019 8:45 pm
Welcome to the forums!

Did you see this stickied post at the top of the board?

viewtopic.php?f=2&t=57154
Yes, I did. I wasn't sure if it actually meant these types of threads are prohibited or not. Just wanted to get confirmation on our specific situation as canceling the policy is a huge deal and big decision for us. I apologize if this was not supposed to be posted.

bayview
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Location: WNC

Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by bayview » Thu May 30, 2019 8:55 pm

TheHCInvestor wrote:
Thu May 30, 2019 8:49 pm
bayview wrote:
Thu May 30, 2019 8:45 pm
Welcome to the forums!

Did you see this stickied post at the top of the board?

viewtopic.php?f=2&t=57154
Yes, I did. I wasn't sure if it actually meant these types of threads are prohibited or not. Just wanted to get confirmation on our specific situation as canceling the policy is a huge deal and big decision for us. I apologize if this was not supposed to be posted.
Oh no, no; I’m sorry; I didn’t mean that at all! I just didn’t know that you had seen that discussion.

Glad that you discovered the dirty side of these things before you got too deeply invested. It can be hard to undo things once a lot of money has been drained. :beer
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

Topic Author
TheHCInvestor
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Joined: Tue May 28, 2019 9:07 pm

Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by TheHCInvestor » Thu May 30, 2019 9:01 pm

bayview wrote:
Thu May 30, 2019 8:55 pm
TheHCInvestor wrote:
Thu May 30, 2019 8:49 pm
bayview wrote:
Thu May 30, 2019 8:45 pm
Welcome to the forums!

Did you see this stickied post at the top of the board?

viewtopic.php?f=2&t=57154
Yes, I did. I wasn't sure if it actually meant these types of threads are prohibited or not. Just wanted to get confirmation on our specific situation as canceling the policy is a huge deal and big decision for us. I apologize if this was not supposed to be posted.
Oh no, no; I’m sorry; I didn’t mean that at all! I just didn’t know that you had seen that discussion.

Glad that you discovered the dirty side of these things before you got too deeply invested. It can be hard to undo things once a lot of money has been drained. :beer

Thanks! Definitely appreciate the responses.

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Nate79
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Nate79 » Thu May 30, 2019 9:14 pm

I'm sorry you were scammed by the insurance salesman with the ole' save for college using whole life insurance. It's sad but yes cancel.

bsteiner
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by bsteiner » Thu May 30, 2019 9:32 pm

TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor ...
Was he/she a financial advisor or an insurance agent?

Topic Author
TheHCInvestor
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by TheHCInvestor » Thu May 30, 2019 9:33 pm

bsteiner wrote:
Thu May 30, 2019 9:32 pm
TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor ...
Was he/she a financial advisor or an insurance agent?
Financial advisor.

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unclescrooge
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by unclescrooge » Thu May 30, 2019 9:36 pm

TheHCInvestor wrote:
Thu May 30, 2019 9:33 pm
bsteiner wrote:
Thu May 30, 2019 9:32 pm
TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor ...
Was he/she a financial advisor or an insurance agent?
Financial advisor.
Anyone can call themselves a finical adviser

bayview
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Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by bayview » Thu May 30, 2019 9:38 pm

unclescrooge wrote:
Thu May 30, 2019 9:36 pm
TheHCInvestor wrote:
Thu May 30, 2019 9:33 pm
bsteiner wrote:
Thu May 30, 2019 9:32 pm
TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor ...
Was he/she a financial advisor or an insurance agent?
Financial advisor.
Anyone can call themselves a finical adviser
+1

The magic question that we must all learn to ask is: are you acting for me in a fiduciary capacity?

In other words, is their ultimate goal to make you money, or to make themselves money?
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Taylor Larimore
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Taylor Larimore » Thu May 30, 2019 9:55 pm

TheHCInvestor:

This article in U.S. News will help answer your question:

3 Reasons to Avoid Life Insurance Policies for College Savings

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

GuySmiley
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by GuySmiley » Thu May 30, 2019 9:58 pm

I remember the weird feeling of my term life guy, immediately (within seconds) upon signature of that policy, pitching that I convert it to whole life for college-related purposes, something about sheltering for financial aid. Made no sense to me, fortunately I passed as I knew term was what I was shopping for, but I didn't recognize him as a vulture until later after I learned more.

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dwickenh
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by dwickenh » Thu May 30, 2019 10:03 pm

bayview wrote:
Thu May 30, 2019 9:38 pm
unclescrooge wrote:
Thu May 30, 2019 9:36 pm
TheHCInvestor wrote:
Thu May 30, 2019 9:33 pm
bsteiner wrote:
Thu May 30, 2019 9:32 pm
TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor ...
Was he/she a financial advisor or an insurance agent?
Financial advisor.
Anyone can call themselves a finical adviser
+1

The magic question that we must all learn to ask is: are you acting for me in a fiduciary capacity?

In other words, is their ultimate goal to make you money, or to make themselves money?
+1

And can you overcome the average 2.3 to 2.8% all in expenses of a managed account with managed funds.
You can increase that for whole life policies to over 3.3% inside a managed account.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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unclescrooge
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Joined: Thu Jun 07, 2012 7:00 pm

Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by unclescrooge » Thu May 30, 2019 10:11 pm

bayview wrote:
Thu May 30, 2019 9:38 pm
unclescrooge wrote:
Thu May 30, 2019 9:36 pm
TheHCInvestor wrote:
Thu May 30, 2019 9:33 pm
bsteiner wrote:
Thu May 30, 2019 9:32 pm
TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor ...
Was he/she a financial advisor or an insurance agent?
Financial advisor.
Anyone can call themselves a finical adviser
+1

The magic question that we must all learn to ask is: are you acting for me in a fiduciary capacity?

In other words, is their ultimate goal to make you money, or to make themselves money?
That's not enough. They must be fiduciary all the time, every time... Or as my friend's ex-adviser said when asked, sometimes they are are fiduciary.

bayview
Posts: 1783
Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by bayview » Thu May 30, 2019 10:14 pm

unclescrooge wrote:
Thu May 30, 2019 10:11 pm
bayview wrote:
Thu May 30, 2019 9:38 pm
unclescrooge wrote:
Thu May 30, 2019 9:36 pm
TheHCInvestor wrote:
Thu May 30, 2019 9:33 pm
bsteiner wrote:
Thu May 30, 2019 9:32 pm


Was he/she a financial advisor or an insurance agent?
Financial advisor.
Anyone can call themselves a finical adviser
+1

The magic question that we must all learn to ask is: are you acting for me in a fiduciary capacity?

In other words, is their ultimate goal to make you money, or to make themselves money?
That's not enough. They must be fiduciary all the time, every time... Or as my friend's ex-adviser said when asked, sometimes they are are fiduciary.
Geeze. I often wonder how people face themselves in the mirror each morning when they shave/ apply makeup.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

tomd37
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Location: Middle Tennessee

Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by tomd37 » Thu May 30, 2019 10:55 pm

At those costs for each of you, I would definitely cancel both policies. Then immediately turn around and consider purchasing term life insurance for each of you and for a period of time that is appropriate. Off the top of my head I would say a 30-year term policy is more appropriate than a 20-year term policy. You say you had your first child earlier this year so a 20-year policy would not even take the child through college should something happen to either one of you. What the probability of more children over what period of time? Your insurances should cover any such period of time and until they are out of your home on their own. I believe it would be cheaper to buy a longer term policy now than to have to take another policy out in 20 years at your age at that time.

Believe me (personal experience speaking), don't buy whole life, universal life, or anything else other than term life for the period of time you need it. And be sure to cover your wife as well as yourself. Mothers need to be insured as well.
Tom D.

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Stinky
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Stinky » Fri May 31, 2019 6:35 am

tomd37 wrote:
Thu May 30, 2019 10:55 pm
At those costs for each of you, I would definitely cancel both policies. Then immediately turn around and consider purchasing term life insurance for each of you and for a period of time that is appropriate. Off the top of my head I would say a 30-year term policy is more appropriate than a 20-year term policy. You say you had your first child earlier this year so a 20-year policy would not even take the child through college should something happen to either one of you. What the probability of more children over what period of time? Your insurances should cover any such period of time and until they are out of your home on their own. I believe it would be cheaper to buy a longer term policy now than to have to take another policy out in 20 years at your age at that time.

Believe me (personal experience speaking), don't buy whole life, universal life, or anything else other than term life for the period of time you need it. And be sure to cover your wife as well as yourself. Mothers need to be insured as well.
+1

The bad news is - this bogus "financial advisor" cost you $15,000.

The good news is - you've recognized your mistake pretty quickly, and avoided paying more years of premiums at $15k per year.

Drop the whole life. Drop the "financial advisor". Right now.
It's a GREAT day to be alive - Travis Tritt

fourwheelcycle
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by fourwheelcycle » Fri May 31, 2019 7:30 am

Yes, cancel your policies. I'm sorry your financial advisor recommended the policies, but I'm glad you have found BH. The next step is to keep educating yourself on finances, including passive index fund investing. We use Vanguard's 529 fund for college savings.

I've told this story before, but I think it's a good one. When my wife and I were just starting out, still living in an apartment but preparing to buy a house and begin our family, we signed up to purchase whole life insurance policies for both of us, subject to a credit check. The insurance company hired Experian to do the check, and Experian sent an agent to our apartment building to interview us. I guess we weren't home, or maybe they intended to ask our neighbors about us, but they ended up interviewing a divorced man who lived across the hall, with his young adult son sharing his apartment.

About a week later, while I was at work, my young, newly married wife got a phone call from our insurance agent saying he was sorry but he would not be able to sell us the whole life policies because Experian reported we were not actually married and, in fact, I was living with another man!

My wife was in tears, but we dodged a bullet. We never did buy whole life insurance.

student
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by student » Fri May 31, 2019 7:52 am

Not only should you get rid of the while life insurance policies, you should get rid of the financial advisor who recommended it.

Nowizard
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Nowizard » Fri May 31, 2019 8:11 am

The only addition I would make is to research your situation to determine whether you wish to add more term insurance. If so, you may want to obtain that first if there are recent health changes that could affect obtaining additional insurance.

Tim

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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Trader Joe » Fri May 31, 2019 8:16 am

TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor and we are thinking we may have made a mistake. I am 31, she is 35 and we just had our first child earlier this year. Together, our pre-tax income is at $153k. My premium is $9k per year while hers is around $6k. We already have 20-year term life insurance. A big part of our why we bought into WL was to save for our child's college education. After doing more research now I feel pretty embarassed about that.

Would it be best to just cut our losses at this point, chalk this up to an expensive lesson, and invest our money for college savings into something else like a 529? Our combined surrender value is less than $1k, but I was told it may be possible to recover some of the unearned premiums.
Yes I would cancel both.

Jack FFR1846
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Jack FFR1846 » Fri May 31, 2019 8:24 am

student wrote:
Fri May 31, 2019 7:52 am
Not only should you get rid of the while life insurance policies, you should get rid of the financial advisor who recommended it.
This!

You could ask what he's doing with the $1200 commission he's received so far from your "investment". It's not yet at the level to buy a BMW, which would have been the case had you pre-paid the policy.
Bogle: Smart Beta is stupid

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BL
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by BL » Fri May 31, 2019 8:28 am

Check term4sale.com or a local INDEPENDENT insurance agent to have them shop around various companies for term insurance.
Might want to do that now. When is next payment due?

Also time to figure out the costs of your financial advisor. Fees, fund ERs and his 12b-1 cut, and/or loads all add up to costs that you pay on top of the poor advice (permanent insurance).

Dottie57
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Dottie57 » Fri May 31, 2019 10:27 am

Jack FFR1846 wrote:
Fri May 31, 2019 8:24 am
student wrote:
Fri May 31, 2019 7:52 am
Not only should you get rid of the while life insurance policies, you should get rid of the financial advisor who recommended it.
This!

You could ask what he's doing with the $1200 commission he's received so far from your "investment". It's not yet at the level to buy a BMW, which would have been the case had you pre-paid the policy.
Yes, get rid of the FA!

Ruger
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Ruger » Fri May 31, 2019 10:34 am

Get rid of the insurance and get rid of your financial advisor. He is not looking out for your best interests.

fyre4ce
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by fyre4ce » Fri May 31, 2019 10:56 pm

I'm surprised no one has recommended a 1035 exchange to a Vanguard VA. Is that just because with the surrender value being so low (10% of the premiums), it would take too long for the balance to grow 10x back to basis?

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nedsaid
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by nedsaid » Sat Jun 01, 2019 1:02 am

TheHCInvestor wrote:
Thu May 30, 2019 7:50 pm
My wife and I purchased Whole Life Insurance in less than a year ago at the recommendation of our financial advisor and we are thinking we may have made a mistake. I am 31, she is 35 and we just had our first child earlier this year. Together, our pre-tax income is at $153k. My premium is $9k per year while hers is around $6k. We already have 20-year term life insurance. A big part of our why we bought into WL was to save for our child's college education. After doing more research now I feel pretty embarassed about that.

Would it be best to just cut our losses at this point, chalk this up to an expensive lesson, and invest our money for college savings into something else like a 529? Our combined surrender value is less than $1k, but I was told it may be possible to recover some of the unearned premiums.
Seeing that you have held these for such a short time, I would just cancel the policies. Make certain you have enough term insurance. Objective isn't to make the surviving spouse rich but to give a few years breathing room. That way no pressure to remarry right away.
A fool and his money are good for business.

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Stinky
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by Stinky » Sat Jun 01, 2019 4:20 pm

fyre4ce wrote:
Fri May 31, 2019 10:56 pm
I'm surprised no one has recommended a 1035 exchange to a Vanguard VA. Is that just because with the surrender value being so low (10% of the premiums), it would take too long for the balance to grow 10x back to basis?
Yes, it would be a long time to recover back to basis.

In this case, probably not worth OP's effort.
It's a GREAT day to be alive - Travis Tritt

KandT
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Re: Should my wife and I cancel our Whole Life Insurance policies?

Post by KandT » Sat Jun 01, 2019 4:29 pm

That's not enough. They must be fiduciary all the time, every time... Or as my friend's ex-adviser said when asked, sometimes they are are fiduciary.
[/quote]

Oh that's kinda like your spouse "Sometimes I am faithful." :D :D Like when there are no opportunities!!

Yes cancel your whole life but keep saving that $15K!!!!

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