Whole Life Questions

[BNTRS]

Also, because I'm telling you, this is so much more important, thought I realize less attactive because we don't get to talk about dividends and cash values.

This shows both graded (increasing yearly) and level premiums. Even at level we're talking about 1.5% of your gross income, with a maximum potential benefit of $3.4 million. You could also do something like a 10 year benefit with the idea the wife returns to work, I'd be careful about that one though.

 

[slick_spe3]

On the rising premium DI insurance, the premium starts at ~$550 annually at my age and rises ever year because I am older, correct? How high would the premium get? Is there an NPV calculation of the cost of premiums for the two different approaches?

Can you convert a graduated premium into a level one at a later date?

DI premiums are sunk, correct? No ROP with this policy? Why can't they structure DI policies like LI policies? Are they too expensive to offer a CV?

Thanks!

 

[dgoldenz]

On the rising premium DI insurance, the premium starts at ~$550 annually at my age and rises ever year because I am older, correct? How high would the premium get? Is there an NPV calculation of the cost of premiums for the two different approaches?

Can you convert a graduated premium into a level one at a later date?

DI premiums are sunk, correct? No ROP with this policy? Why can't they structure DI policies like LI policies? Are they too expensive to offer a CV?

Thanks!

Without looking at the actual scale of increases on the graded product, I would say that if you can afford the level premium to go with that. The premiums are guaranteed not to increase and the policy is guaranteed renewable. $1200/year for disability insurance is going to look dirt cheap when you're in yours 40's/50's/60's, even if you exercise the future increase options to increase your coverage.

There is no ROP for disability. ROP life insurance policies are much more likely to lapse than a disability policy and the insurance companies know it.

 

[BNTRS]

On the rising premium DI insurance, the premium starts at ~$550 annually at my age and rises ever year because I am older, correct? How high would the premium get? Is there an NPV calculation of the cost of premiums for the two different approaches?

Can you convert a graduated premium into a level one at a later date?

DI premiums are sunk, correct? No ROP with this policy? Why can't they structure DI policies like LI policies? Are they too expensive to offer a CV?

Thanks!

Sorry, I had the graded to level premium comparison in the original, then changed it and forgot to put it back in. It's on the last page of the attached.

I am a big fan of using graded premiums especially in earlier years. There's other places the money can go. We could take about graded premium and placing the different in a low risk investment like bonds, or even a life policy, doesn't take much to make the two just about match each other based on interest earned in years you are paying less from graded than when if you went level.

Notice that the cumulative difference is still in your favor by age 50, the last year you can switch to a level premium. If you converted at that age, you'd then save around $3k from the graded premium by age 67. If you really took the different and were saving it, you'd be even more ahead. Again, huge fan of graded premiums, that's how I do it personally.

Some companies have attempted return of premium DI product with very limited success. The issue is DI is more expensive to administer, and creates a lot bigger accounting problems. Take into consideration that if paying graded premiums at a little over 500 per years for the next couple of years Guardian is on the hook for over 3 million dollars (I laugh at the people who suggest disability insurance is more expensive than life insurance).

There was a time when accounting practices for disability insurance were more lax, and there were a lot more carriers, and a lot more features available. Then Fasby came a long and took a lot of carriers out of the game. There are fewer than 20 major individual disability insurance players in existence.

Take also into consideration that Guardian is saying pure own occ with no anti meandering provision, meaning if you can't be an engineer, but can do something else and earn money, even if you earn more money, they'll still cut you a check. It's the best definition of disability in the industry.

There are loads of additional benefits we could get into.

 

[slick_spe3]

At age 50, if I elect to switch to the level premium, what would it be going forward? $1,251?

Do you have to have premiums based on payments until age 67? What about until age 60? What are my options?

Back to WL: what would be the advantage of Guardian's 10 Pay VS a NY Life Custom WL paid up in 15 years or so? Do both offer PUAs AFTER the policy is paid up?
Guardian is just outside of the Top 3, correct?

There sure isn't a good resource out there for true comparisons of mutual insurance companies "bang for your buck" in terms of DB and CV growth as they relate to premiums. Are they all too close to worry about? I hate not being able to comparison shop...ugh.

 

[LGilmore]

"Are they all too close to worry about?'

Pretty much. You should be able to pick one, go through life and be OK.

 

[dgoldenz]

At age 50, if I elect to switch to the level premium, what would it be going forward? $1,251?

Do you have to have premiums based on payments until age 67? What about until age 60? What are my options?

Back to WL: what would be the advantage of Guardian's 10 Pay VS a NY Life Custom WL paid up in 15 years or so? Do both offer PUAs AFTER the policy is paid up?
Guardian is just outside of the Top 3, correct?

There sure isn't a good resource out there for true comparisons of mutual insurance companies "bang for your buck" in terms of DB and CV growth as they relate to premiums. Are they all too close to worry about? I hate not being able to comparison shop...ugh.

Since dividends aren't guaranteed and you're projecting out 30-40 years, I'd say you're better off throwing darts at a board than trying to guess which will have the best growth over such a long time period. This year could be Guardian, 5 years from now could be NYL, we'll never know until it happens.

 

[BNTRS]

At age 50, if I elect to switch to the level premium, what would it be going forward? $1,251?

Nope it's about $3,100 per year. Graded premium in that year is $2,896. I say about b/c the levelized amount is not guaranteed as the graded premium structure is. So, what we see as the graded premium in the illustration will be the premium you pay, but the levelized premium (switching from graded to level) is not necessarily guaranteed, could be better; could be worse.

Again, if you really going to save the money in the difference in premium you'll be ok, but if not and don't plan on spending it somewhere else, take the level option up front.

Do you have to have premiums based on payments until age 67? What about until age 60? What are my options?

Nope, you can choose 2, 5, 10 years or to age 65 or 67. We could also do a lifetime benefit, but I'd tell you to use a retirement contribution disability product, which makes the contributions you make to an IRA and/or 401k on your behalf if you are sick or hurt and out of work. It's cheap.

Like I said, you could use a shorter benefit period under the assumption that wife returns to work if you are out due to illness or injury. You'll give her some time to get up and running, and then she'll take over as primary breadwinner. Your choice (and again, I just noticed that I took those out too when I made the change...see attached for pricing on different benefit periods).

Back to WL: what would be the advantage of Guardian's 10 Pay VS a NY Life Custom WL paid up in 15 years or so? Do both offer PUAs AFTER the policy is paid up?
Guardian is just outside of the Top 3, correct?

No, Guardian is the only carrier that offers PUA's after the base policy is paid up.

By top three you are (I'm guessing) refering to size measured by admitted assets. Guardian is 4th, yes.

There sure isn't a good resource out there for true comparisons of mutual insurance companies "bang for your buck" in terms of DB and CV growth as they relate to premiums. Are they all too close to worry about? I hate not being able to comparison shop...ugh.

Like others have said, the variance hasn't been too much when it comes to cash value and death benefit growth, and no one knows which will be best 10, 20, 30, etc. years from now.

In terms of comparison shopping. We can definitely provide you with illustrations from other carriers. I haven't brought it up because you mentioned Guardian originally. I think you'll find they are very attractive, but if you want to compare numbers on a ledger and talk about how products differ, absolutely we can go down that road.

 

[slick_spe3]

I have no interest in haggling over IRRs amongst the "Big 4". I understand that the dividends are not guaranteed, and a lot can change in 40 years. I won't sweat the small stuff.

However, I do want to know about differences in premiums and policy features amongst the large mutuals. Things like the fairly low 5% load fee on PUAs offered by Guardian are important. Another thing I would like to compare would be the ratio of PUA dollars to DB that each company offers. Each mutual must have some multiplier.

What about the method each company uses to convert term riders or separate term policies into whole life; does any company handle this better than the others?

Doesn't NY Life double the DB if both parents pass away at the same time?

I still really like the Guardian 10 Pay, but getting a whole life policy is not a committment I take lightly. I think I have narrowed down my interests to NY Life, MM and Guardian.

Back to DI insurance, what does the premium do when you select the 10 year payout cap? Does that policy also have the graded and level premium options?

Thanks in advance for your help.

 

[BNTRS]

I'll compile information on WL contracts and post later, that's going to take more time. But as for the Disability question:

For Level Premium:

To age 67: $104.29/mo

To age 65: $95.19/mo

10 Years: $69.11/mo

5 Years: $63.96/mo

2 Years: $36.72/mo (but we loose the 3% cola rider)

Graded Premium

To age 67: $42.90/mo

To age 65: $39.73/mo

10 Years: $30.60/mo

2 and 5 years are not available for graded premiums.