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  • Northwestern Mutual Whole Life

    I’ve been with NWM ever since I got out of residency. I just joined WCI and now realize how financially ignorant I’ve been. I have whole life with them for the last 5 years. I pay about 18000 annually for a 1.3 million. I am on 43 yrs old. What options do I have at this time?

  • #2
    Are you maximizing your retirement accounts? Any student loan debt? Do you have high quality own occupation disability insurance in place?

    Heck, do you have a spouse and/or kids who rely on your income? If not, you may not need life insurance for the death benefit.

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    • #3
      Groundhog Day.

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      • #4
        Read up:

        https://www.whitecoatinvestor.com/ho...e-life-policy/

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        • #5
          Originally posted by TandavKing View Post
          I’ve been with NWM ever since I got out of residency. I just joined WCI and now realize how financially ignorant I’ve been. I have whole life with them for the last 5 years. I pay about 18000 annually for a 1.3 million. I am on 43 yrs old. What options do I have at this time?
          once you get all the relevant information and take the appropriate steps you will need to get rid of it.

          https://www.whitecoatinvestor.com/wh...ife-insurance/
          https://www.whitecoatinvestor.com/ho...e-life-policy/

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          • #6
            With respect to all of the physicians who buy into the NWM mantra - when I read posts like these and the incredible amounts of money spent on policies for doc's who will almost certainly be FI and almost certainly have no need for such a policy in the future but who complain about the cost of good financial advice, which will pay for itself 10s or 100s of times over (and, on the other end of the spectrum, post about the best place to park $25k for an efund that will earn $500/yr), I just shake my head.

            TandavKing - welcome to the forum and thank you for your post. If it helps, you are in a very large club and you've come to the right place to help you resign.
            Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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            • #7
              racelari mentioned what he did in his guest post in sept. https://www.whitecoatinvestor.com/finsmart/

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              • #8
                Thank y’all for your input.
                What the best way to jump ship and take as much of my belongings as possible?

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                • #9
                  Briefly,
                  after 5 years you are probably under water on the policy- cash value less than premiums paid. If that is the case, you can 1035 exchange to an annuity, let it grow until its value equals your basis and then cash out tax free. Annuity rates are very low right now so it can take a while for you to catch up.

                  If you are lucky and only slightly under your basis or breaking even (unlikely after only 5 years), then you can just surrender the policy at a small loss or very small gain.

                  You should get an in-force illustration of the policy to see what the growth is projected to be. It is extremely unlikely that keeping the policy is a good move, but the illustration will tell you that.
                  It will also help you determine whether you are better off getting out right now or waiting until the next dividend, even if you need to pay another premium to get it. Again, probably not worth holding on that long, but check.

                  If you need the death benefit, get your replacement term policy before you drop the whole life. If you don't need the death benefit at all, then you can omit this step.

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                  • #10
                    yeah I did! Don't feel bad man, I lost 50K to NWM whole life. However, I have now dug myself out of it by doing a 1035 exchange and the cash value at least on my wife's old policy grew in 1.5 years to cost basis and is now invested in a taxable account! and my old cash value is only 8K away from growing back to cost basis as well Here is how I did it.

                    First, make sure you have term insurance in place if you have kids or spouse that depends on your income. If your NWM salesman was like mine, you likely have term to 80 life insurance which you should keep until you cancel the whole life policy. If you weren't suckered into that like I was, then use term4sale.com to find the cheapest rates and then ask one the WCI recommend insurance agents to get appropriate term life insurance, and also btw appropriate true own occ disability insurance if you have an NWM policy like I got. NWM is NOT true own occ disability, and it's medical own occupation definition is name to fool us into think NWM has a good disability policy. Used Bob Bhayani.

                    With term in place, STOP PAYING THE WHOLE LIFE PREMIUM!!! You can do this by logging into the NWM website and clicking on the whole life policy and selecting to end automatic payments. But DO NOT stop payments on the NWM term policies until you get these replaced.

                    The Whole Life policy I did the 1035 exchange into Fidelity, which you should do so that your cash value can grows up to cost basis (aka how much you paid in premiums) and you can make up your loss with tax free growth. paying $18K for 5 years your cost basis is around $90K, right, and I am assuming you probably have around $50K of cash value. So with the 1035 exchange you can grow that cash value $40k more without tax! Ask NWM for an "in-force illustration" will give the actual amount you would exchange into the Fidelity low cost annuity. Call fidelity saying you want to do a 1035 exchange. Fidelity can then "pull" the money out of the clutches of NWM. Fidelity had the cheapest fees I could find at 0.25% of what you invest per year, (aka 25 basis points which I had just learned is the lingo), plus any expense ratios within the funds you can invest in there, which the best ones are only 12-17 basis points. If you need a step by step guide on how to do the 1035 exchange, search the comments section of https://www.whitecoatinvestor.com/ho...e-life-policy/ and look for a comment dated "June 4, 2015 at 1:15 pm MST". In fact, just use the "find" function in your web browser and paste in that date. The commentator's name was TJ and gave awesome step by step instructions on 1035 exchanging the whole life policy! Just substitute in Fidelity for Vanguard. I myself did not actually "fire" my adviser but did go behind his back and would call NWM general number in order to do the exchange, send me any necessary forms, etc. You'll have 30 days to do this after you stop paying the NWM whole life premium given NWM will start eating at your cash value to pay the premium due, however this whole 1035 exchange took me only about 10 days.

                    Again once the whole life is gone, and you have NWM term insurance left over like I did, shop level term life insurance as described in the WCI blog post:https://www.whitecoatinvestor.com/ho...ife-insurance/
                    and use term4sale.com to find the cheapest rates, gets appropriate disability with it, then cancel the NWM term to 80 life insurance.

                    BTW, the reason I chose the Fidelity VA is because it seems to be the lowest cost VA with a cost of 25 basis points per year plus the expense ratio of its funds and the best ones in there are only 12-17 basis points. This beats the Vanguard VA which has 50 basis points per year cost. However, if your cash value is above $96K, you'll want to use Nationwide (formerly Jefferson National) VA which has a flat fee of $240 per year, as past $96K in cash value the 25 basis point fee from Fidelity will cost you more.

                    I know this is long but I was in the same exact situation. actually it was worse because I also had the following with NWM:

                    1. A adviser led taxable brokerage account

                    2. a variable annuity within an IRA

                    3. a virginia 529 plan that is adviser led.

                    4. An adviser led traditional IRA which was opened when I rolled over old attending job 401k

                    If you need more help or help with any of the other products NWM might have sold you, just let me know. You can always e-mail me at [email protected] as I definitely want to help out being a fellow NWM victim myself! Or just reply in this forum. My name is Rikki.

                    You can do this- I did it, and had no financial knowledge at all until WCI came into my life.

                    PS- are you married? The hardest thing out of all of this was telling my wife!

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                    • #11
                      To the OP, do not feel bad, as you are not alone. Physicians seem to be targeted for the NWML sales pitch and many succumb to it.

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                      • #12
                        This is an example of emails I get three or four times a year from our gme office advertising NWM open houses, etc.:
                        Residents & Fellows,
                        As a Graduate Medical Education (GME) trainee, you have a unique opportunity to secure individual, true own occupation, specialty specific disability income without medical underwriting through your group long-term disability plan at the ------. This policy is available to you at a discount before you finish your training at the university. We encourage you to become knowledgeable about your options....

                        I'm assuming emails like these are sent at many other institutions. I'm not sure how NWM gets embedded in the gme office, buts it a great marketing strategy. The deck is stacked against young docs.

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                        • #13
                          I bought a 500k whole life policy in 1998. Cancelled it in 2006. Spent a little over 45K. Got back 6k? Oh well shrug.

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                          • #14
                            Originally posted by pierre View Post
                            This is an example of emails I get three or four times a year from our gme office advertising NWM open houses, etc.:
                            Residents & Fellows,
                            As a Graduate Medical Education (GME) trainee, you have a unique opportunity to secure individual, true own occupation, specialty specific disability income without medical underwriting through your group long-term disability plan at the ------. This policy is available to you at a discount before you finish your training at the university. We encourage you to become knowledgeable about your options....

                            I'm assuming emails like these are sent at many other institutions. I'm not sure how NWM gets embedded in the gme office, buts it a great marketing strategy. The deck is stacked against young docs.
                            Gosh, it’s interesting to see someone at the teaching hospital call this a “true own occupation” policy when it in fact is not.

                            If this deceptive marketing puffery is coming from a NWM agent, I wonder how he or she got the email distribution list. If a doctor or administrator at the program falsely is claiming that this is a true own occ policy, I’d kind of like to see both the employee personally and the training program that employs him or her eat some of the costs of residents and fellows buying an inferior policy under false pretenses, overpaying for said policy, and possibly being denied coverage for a claim that would have paid out if it were true own occ.

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                            • #15
                              Originally posted by Hank View Post

                              Gosh, it’s interesting to see someone at the teaching hospital call this a “true own occupation” policy when it in fact is not.

                              If this deceptive marketing puffery is coming from a NWM agent, I wonder how he or she got the email distribution list. If a doctor or administrator at the program falsely is claiming that this is a true own occ policy, I’d kind of like to see both the employee personally and the training program that employs him or her eat some of the costs of residents and fellows buying an inferior policy under false pretenses, overpaying for said policy, and possibly being denied coverage for a claim that would have paid out if it were true own occ.
                              I wouldn't put blame on the institution for falsely claiming it was own occ- chances are they (program director, attending) dont know the difference and are just forwarding info, and its also likely that they themselves own a whole life policy and bad disability. Talking about finances is unfortunately still taboo in many ivory towers. One of my own dept chairs in residency was trying to tell me how great it was that he paid an AUM fee of something like 1.5% bc his "guy was more motivated to make money for him, and only made money if his investments did well." Granted the chair before him was FI, financially savvy, but that's also why he retired when hospital admin became too overbearing for him.

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