Reputable? Whole Life with Northwestern Mutual...

[LGilmore]

" Many agents "

Do and say a lot of things they shouldn't. Not just exclusive territory of agents who have WL to offer.

 

[2insureyou]

Newby, c'mon man...These mutuals have been paying dividends EVERY year for well over 100 years. Through the Great Depression and every other major financial crisis in our lifetimes AND our grandparents, AND our great-grandparents lifetimes.

I know that in OUR group, we always discuss the guaranteed and non-guaranteed columns. That's how we're trained... it's how I was trained, anyway, and I've only been with NML for four years of my 7 in the industry.

If it were allowed (which it's not for obvious reasons) I would absolutely sign an illustration with a note on it that says it is ludicrous to IMPLY dividends won't be paid. That statement does not guarantee a dividend, but NML's 140th consecutive dividend certainly makes it more ludicrous to imply they won't be paid rather than will be paid...

I remember some *** from Knights of Columbus tried to steal a case from a colleague recently by saying something to the effect of "How do you know NML will even be around to pay your claim?"

Seriously? It's comments like this that make competition so easy. When you have history on your side, AND can show reasonable, profitable projections for a client, it's real easy to win over somebody making these kinds of statements. REAL easy...

 

[Newby]

Newby, c'mon man...These mutuals have been paying dividends EVERY year for well over 100 years. Through the Great Depression and every other major financial crisis in our lifetimes AND our grandparents, AND our great-grandparents lifetimes.

I know that in OUR group, we always discuss the guaranteed and non-guaranteed columns. That's how we're trained... it's how I was trained, anyway, and I've only been with NML for four years of my 7 in the industry.

If it were allowed (which it's not for obvious reasons) I would absolutely sign an illustration with a note on it that says it is ludicrous to IMPLY dividends won't be paid. That statement does not guarantee a dividend, but NML's 140th consecutive dividend certainly makes it more ludicrous to imply they won't be paid rather than will be paid...

I remember some *** from Knights of Columbus tried to steal a case from a colleague recently by saying something to the effect of "How do you know NML will even be around to pay your claim?"

Seriously? It's comments like this that make competition so easy. When you have history on your side, AND can show reasonable, profitable projections for a client, it's real easy to win over somebody making these kinds of statements. REAL easy...

I also know a farmer that bought a Huge policy from NML a few years ago that he thought was a 5 year paid up policy. He was in year 3 when he told me about it.

I told him that without seeing the policy it could be anything but it's LIKELY that it will never be an actual paid up policy but that the NML sales rep might have set it up where he HOPES the dividends will carry the premium after 5 years. I told him if it is such a policy that he will always want to stay on top of it each year to make sure the dividen is carrying it and it's not auto premium loaning out of the cash value.

He was polite but didn't believe me.

Two years later he believed me. He met with me again and said "That thing was exactly like YOU said...not like the NML guy said at all. I have to keep paying it a couple more years now and then they THINK it will be OK after that.

Dividends are a great thing if they are sold as what they are...A BONUS feature.

If they are sold like it's a sure thing it's simply misleading people. And it's illegal. NO company guarantees dividends.

 

[Chuckles21]

I also know a farmer that bought a Huge policy from NML a few years ago that he thought was a 5 year paid up policy. He was in year 3 when he told me about it.

I told him that without seeing the policy it could be anything but it's LIKELY that it will never be an actual paid up policy but that the NML sales rep might have set it up where he HOPES the dividends will carry the premium after 5 years. I told him if it is such a policy that he will always want to stay on top of it each year to make sure the dividen is carrying it and it's not auto premium loaning out of the cash value.

He was polite but didn't believe me.

Two years later he believed me. He met with me again and said "That thing was exactly like YOU said...not like the NML guy said at all. I have to keep paying it a couple more years now and then they THINK it will be OK after that.

Dividends are a great thing if they are sold as what they are...A BONUS feature.

If they are sold like it's a sure thing it's simply misleading people. And it's illegal. NO company guarantees dividends.

I would have to know more about the situation before fully commenting, but I know I always make sure my clients understand that dividends are not guaranteed and the numbers are projections. Given that I also know a lot of instances where I tell clients this and then 2 minutes after they leave my office they either don't remember or remember it a different way.

The policy was still receiving dividends so you might want to clarify your point a little, it just might have been receiving less than the projected due to the financial environment that we are currently in.

Just curious what was your suggestion to him?

P.S. Taking a policy paid up is simple, not sure why you think it never would be. He easily could have taken the policy paid up after year 5 (actual paid up)(usually not a good choice this early), it just doesn't happen automatically you have to actually make it happen. Of course you have to do some work to change your dividend as well to pay the premiums, so either way there was going to be some monitoring needed.

 

[2insureyou]

Chuckles21... exactly.

My language is something like: Dividends are not guaranteed. However, Northwestern Mutual has paid them every year for 140 years. This is the total column if dividends never change, and this is the guaranteed column if NML never paid another dividend. Your results may be higher or lower, but every year you receive a dividend, the guaranteed column is forever reset by that year's performance, and moving forward, it will be based on the vested amount in the account. (something to that effect)

Anytime we are looking at using dividends to pay premiums in the future, I make sure the client knows the dividends are not guaranteed, and that if the interest rate environment continues to be low, we may have to pay premiums for a longer period of time, and that at any point, dividends could potentially not be there at all.

"Dividends are never guaranteed" is a regular part of any experienced rep, and should be of new reps. My guess is, like Chuckles said, the clients simply did not remember everything the rep said (and they NEVER remember everything you say... if you think they do, you think way too highly of yourself)

I know that we are in the same town, Newby. I've worked with every veteran rep in this office, and most of the new ones on joint cases. I've never heard anyone guarantee a dividend... not once... not ever...

 

[Norwayguy]

My guess is, like Chuckles said, the clients simply did not remember everything the rep said (and they NEVER remember everything you say... if you think they do, you think way too highly of yourself)

No dog in this fight....But I think as Professionals we need to be concerned with Agents turning on other agents over this very fact that what the client tells you today is most probably NOT what the client was told at POS years ago.

Now annual reviews, and follow up letters hitting these points help and CYA.

After reading the thread about an agent going to jail for an annuity sale to someone with dementia I can only say this...Document Document Document.

 

[Newby]

I agree that people don't retain what an agent tells them. But in this case the client is very sharp and he THOUGHT he bought a 5-pay policy. He didn't know he had to rely on dividends to make the premium for him.

He was under the impression that the policy was to be PAID UP in 5-years.

I don't know who sold it. I don't know how it was explained. I just know he doesn't feel he was ever offered a true 5-year paid up policy. He wasn't given the choice. Because that's what he thought he bought.

 

[Chuckles21]

I agree that people don't retain what an agent tells them. But in this case the client is very sharp and he THOUGHT he bought a 5-pay policy. He didn't know he had to rely on dividends to make the premium for him.

He was under the impression that the policy was to be PAID UP in 5-years.

I don't know who sold it. I don't know how it was explained. I just know he doesn't feel he was ever offered a true 5-year paid up policy. He wasn't given the choice. Because that's what he thought he bought.

I personally have never even heard of a 5 pay policy. Not saying they possibly are not out there, but the ones I see are usually 10 pays. I was not implying that this person was not smart, that has nothing to do with it, the fact is that when he purchased it he probably over the course of a few meetings discussed it say 2 full hours 3 years ago at that time and even longer now.

In fact I just saved a big life policy last week solely by going back over the policy and why we put it in place. Over the course of a year this very educated person read something on the internet about universal life policies, thought it applied to his and wanted to cancel. Once we did a simple review of his whole life policy he kept it.

Here is what I imagine happened, the agent showed him either using dividends after 5 years to pay the premium, this seems far fetched to me as dividends usually take longer to match the premium no matter how funded, or showed him taking it paid up after 5 years. Again he easily could have chosen this option (and still can), but it does not do it automatically. All he has to do is call an agent or the home office and say he wants his policy paid up. Sign some paperwork and no more premiums.

DISCLAIMER: Without looking at this personal situation I am not actually advising this individual to do so, just saying that he can.

 

[2insureyou]

And remember, any policy that is actually taken paid up in the first 7 years becomes a MEC... I can't imagine anyone in our office telling someone "paid up" in 5 years.

That's not to say MEC's are never warranted. I've sold a couple of Single Premium Life policies in my day where appropriate.

 

[lsalmans]

And remember, any policy that is actually taken paid up in the first 7 years becomes a MEC... I can't imagine anyone in our office telling someone "paid up" in 5 years.

That's not to say MEC's are never warranted. I've sold a couple of Single Premium Life policies in my day where appropriate.

This is inaccurate information you have just stated. As stated on their website.

Mandated by government. The test used to determine if a policy is a MEC is called the 7-pay test. The 7-pay test has nothing to do with the actual number of premium payments. Instead, it is a limitation on the total amount you can pay into your policy in the first seven years of its existence. The test is designed to discourage premium schedules that would result in a paid-up policy before the end of a seven-year period.


As you can see the 7 pay test, is just that, a way to test if its a MEC. Most agents think this means its a minimum of 7 years of payments you must make. I have sold lots of Custom Whole Life polices by New york life, that are paid up in 5 years. You add a term rider and you will avoid the MEC. To answer a previous post. YES, policies can be paid up in 5 years. The new york life custom whole life you can choose how many years you would like to pay before your policy is paid up ( 5 is the minimum).