{ "media_type": "text", "post_content": "I’m 30, with no kids, currently paying $540/mo for a whole life insurance policy through my advisor (family friend, mind you) at NWM. No debt, investing 2k a month into other more traditional investments (e.g., 401k, ira). I care less about the death benefit but I’ve been repeatedly reminded about the guaranteed RoR associated with the cash value - does this investment vehicle make sense to continuing with? TIA!", "post_id": "6177719d4ac7b5002d8ab29c", "reply_count": 60, "vote_count": 3, "bowl_id": "5b3f7377ab53db00136f7b4c", "bowl_name": "FIRE Financial Independence Retire Early" }

I’m 30, with no kids, currently paying $540/mo for a whole life insurance policy through my advisor (family friend, mind you) at NWM. No debt, investing 2k a month into other more traditional investments (e.g., 401k, ira). I care less about the death benefit but I’ve been repeatedly reminded about the guaranteed RoR associated with the cash value - does this investment vehicle make sense to continuing with? TIA!

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I think generally a life insurance policy is good if you have dependents that rely on your income stream and you would like to provide for them in your absence, or you have debts and don’t want to burden your loved ones with that responsibility when you pass. Otherwise I see it as a an expense that you’re paying for (think of the overhead and corporate profits you’re paying for with your insurance premiums paid).

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Why don’t you talk to another financial advisor and see what they say? I’m not sure you need life insurance since you don’t have a family - but you may have a family in the future and your rates should be lower if you are young and healthy now. What are the riders on your policy? Do you have along-term care insurance rider? If so, there is some value in that since you don’t have a spouse and kids who can help you out if you suddenly have a stroke and can’t take care of yourself anymore. You are building up cash value, but for the first several years you really are paying the premium more than building up a cash value. Do, you aren’t likely to see a RoR on that for many years. There should be an estimated schedule of the cash value over time. There are many factors that need to be reviewed. That is what a financial advisor can do for you. I recommend talking to an independent advisor who isn’t tied to promoting their own products. Look for someone who discusses wealth management on their website. Some financial advisors will look at your assets wherever they are and give you an unbiased opinion of whether things seem to be set up or not. They charge a fee to do that, but at least you know they aren’t likely framing things in a way that encourages you to buy their own products.

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I have term and it’s $40/month for $1M coverage for 20 years. I guess there’s no cash back but I’m basically just paying $10K to ensure my family gets $1M if I die before my kids are grown. I’m fine with that.

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Agree

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I almost got roped into one of those by a family friend. Horrible investment and will only get worse. Their “guaranteed” RoR is too good to be true- you’ll see a fraction of what they say

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I just read this to my husband who is a CFP and he said that while it is likely that you are being ripped off (especially since NWM is captive so they’re pushing their products) you didn’t provide nearly enough information on your overall financial situation for people in an online forum to know for sure. He said a bunch of other stuff too but I didn’t follow all of it so can’t accurately repeat it. 😆

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Why do you have a life insurance policy if you have no kids?

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For reference, I’m 37 and just purchased a term 40 plan for 2 million and that costs me about 100 a month.

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Yeah. So I’m told that’s theoretically what they can charge, but rarely do they ever go up that much. I guess we’ll see. The hope is I can cancel the policy by then

Maybe buy a 20 year term policy to protect your parents / family (more if you plan to have kids). Invest the difference in an index fund. Source: I’m a life insurance actuary.

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Thank you everyone! After the clear consensus gained here, it gave me the confidence to meet with my advisor, surrender the policy, and cut my losses. 🥴

likeuplifting

Lol. I looked at the sp 500 growth in an etf. No regrets!

Term Life is more than enough. I have enough Term for 20 years to cover my mortgage, and that significant difference in premiums vs Whole, it's been invested. The assumption is 20 years from now, I don't need that coverage because I will have accumulated enough wealth across my home and long term investments for any possible surprises.

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$540/month is a lot. What’s the guaranteed RoR associate with the cash value? My mom made me get a whole life when I was in early 20s, premium was $1200/yr for 100K death benefit. I only got it because she said she’d feel better if I did and I figured that would be enough to cover my funeral cost. Fast forward, I terminated my whole life in my early 30s with only around 7K cash value and ended up getting some kind of index universal life with same death benefit. A friend, who was the agent, told me there’s guaranteed RoR, blah, blah, blah. But he promised me that I only have to contribute $50/month for 5 yrs or so, and then the cash value in the policy will provide me coverage until death, so that’s all I ended up doing. Not putting any more money into that bottomless pit, but continuously monitor the cash value to make sure it is not depleted completely.

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Why would you even need life insurance? Just invest it yourself.

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Me and my spouse got 25 yrs term life for $1M each when first kid was born. We figured by 25 the kid will be done with college and working and house etc will be paid off. We got a return on premium policy so after 25yrs we will get back all the premium we paid. It costs about $200 per month for both.

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What kind of fees for AUM are you paying this “friend” of yours?

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That’s so much money/month. You can typically get life insurance through your employer for X times your salary for very cheap or get a term life policy for a much better price annually. You’re throwing away $540/month.

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I have dependents and have whole life mostly bc I want the cash value and I can borrow against it without paying back into the policy in case I need it when I’m older. But I don’t pay that much, $100/month with term rider.

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This is the worst investment ever. It is a complete rip off. Buy term and invest the rest.

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I got a 20 year term for $750 / year when I was 40. I just wanted to protect my family in case I did die so they could pay off the home loan live off of investments. Seems expensive now, but I know when I'm in my 50s it well seem cheap.

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I cashed out/cancelled mine at the age 31 for 21k. Was paying $600/mo. I have instead invested aggressively in the stock market with this money and at 32 (18 months later) have 75k in money that I can use for anything. Getting away from my NWM financial advisor was the liberating. When I asked for a an accurate analysis on RoR he opted to fire me as his client because we didn't see eye to eye. Cancel it, accept any loss, because the sooner you do it, the sooner you will make more money in investing.

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It was approximately April 2020 when I made this change, which was a large stock market dip. I was much too aggressive in retrospect, but I had 50% in VTI, 25% SSO and 25% TQQQ. I also contributed more than 600$ per month. At times up to 1200$. I contributed stimulus dollars, work bonuses, and tax returns. I would guess that it was close to a 50% RoR, but I also was not smart in that amount of leverage and have since scaled back and put some allocation into bond ETFs. Lastly, I did transition some TQQQ to VTI when TQQQ was high and then transitioned back once TQQQ dropped ~10%. There was some luck here....

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Term life is a much more efficient way to protect financial dependents in case there's a disaster. If you're using whole life as an investment vehicle you might be better off with govt bonds which are also safe but you can manage how much you invest monthly or sell if needed. Check out Treasury direct.gov

Another example of why I won’t consider anyone who works at NWM a friend Business model of pushing cold calling your whole contact list to sell awful products

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