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Discuss Latest WCI Blog Post: Suckered into Whole Life Insurance . . . My Brain Made Me Do It!

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  • Discuss Latest WCI Blog Post: Suckered into Whole Life Insurance . . . My Brain Made Me Do It!

    Here's a tale of just how destructive buying into a whole life insurance policy can be. Several years later, we're still being affected.

    The post Suckered into Whole Life Insurance . . . My Brain Made Me Do It! appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.



    Click here to view the article!
    Helping those who wear the white coat get a fair shake on Wall Street since 2011

  • #2
    OK, this was certainly better than the last article.

    I just have a hard time wrapping my head around your wife blaming whole life insurance on not being able to attend your child's gymnastics meet. Really? Your brain made you buy this policy??

    There is never much sympathy for a two-doctor couple complaining about making a financial mistake.

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    • #3
      This one certainly has the insurance agents in the comments section up in arms.
      Helping those who wear the white coat get a fair shake on Wall Street since 2011

      Comment


      • #4
        Just to set the record straight, I am not an insurance agent!!

        Comment


        • #5
          I enjoyed the article. Sadly, I bought my universal life policy long before I found Bogleheads or WCI. In fact, I was done with the 10-year pay in by the time I joined WCI. It was no hardship to pay it as I was making a bunch of money but given that the money would otherwise have gone into VTI (less whatever the low term life premiums would have been) it still stings. Every once in a while I recalculate the value if the money had gone in to VTI and compare it to the current 'value' of the policy. Ouch. It does help me to illustrate to students and residents who ask about financial matters why this is not something they should be wasting their money on. And this is high on my list of 'pearls' on personal finance. I still tell the agent that this is by far the worst 'investment' I ever made but I am sure that it is just water off a duck's back.

          Comment


          • #6
            I could be incorrect but: I think most of the LTDI advertisers also sell life insurance. I doubt they would turn down a policy, but I would be curious how hard they push whole life. There is a difference between salesmanship and providing service.

            Comment


            • #7
              Originally posted by Bev View Post
              OK, this was certainly better than the last article.

              I just have a hard time wrapping my head around your wife blaming whole life insurance on not being able to attend your child's gymnastics meet. Really? Your brain made you buy this policy??

              There is never much sympathy for a two-doctor couple complaining about making a financial mistake.
              I have to agree. I cringed with the gymnastics anecdote. was that really why she was moonlighting? Of course among doctors who do this it is more often to afford the Escalade or other luxury purchases.
              It was clearly a bad idea to do what sounds like whole life dominating their savings plan.

              full disclosure, I still have VUL policies, which were admittedly not a great idea when I got them, but asset protection and the tax strategy ideas sold us on them at the time. Now I am waiting to find the right rollover exit strategy.

              Comment


              • #8
                Originally posted by Notsobad View Post

                I have to agree. I cringed with the gymnastics anecdote. was that really why she was moonlighting? Of course among doctors who do this it is more often to afford the Escalade or other luxury purchases.
                It was clearly a bad idea to do what sounds like whole life dominating their savings plan.

                full disclosure, I still have VUL policies, which were admittedly not a great idea when I got them, but asset protection and the tax strategy ideas sold us on them at the time. Now I am waiting to find the right rollover exit strategy.
                This might not be a disaster, why are you waiting? Just a reminder that some one needs to do it.

                Comment


                • #9
                  Originally posted by Notsobad View Post

                  I have to agree. I cringed with the gymnastics anecdote. was that really why she was moonlighting? Of course among doctors who do this it is more often to afford the Escalade or other luxury purchases.
                  It was clearly a bad idea to do what sounds like whole life dominating their savings plan.

                  full disclosure, I still have VUL policies, which were admittedly not a great idea when I got them, but asset protection and the tax strategy ideas sold us on them at the time. Now I am waiting to find the right rollover exit strategy.
                  Depending on how long you have held them, using a 1035 exchange to trade the VUL policies in for an annuity (probably a DIA) might be a decent choice. The terrible returns on permanent life insurance tend to be front-loaded.

                  Comment


                  • #10
                    Originally posted by artemis View Post

                    Depending on how long you have held them, using a 1035 exchange to trade the VUL policies in for an annuity (probably a DIA) might be a decent choice. The terrible returns on permanent life insurance tend to be front-loaded.
                    Actually I tried to do the 1035 exchange to an annuity, a MYGA, since I did not want to deal with a fee laden variable annuity that would sit in a marginal rate tax bucket. I want to use this tax deferred vehicle for stable value investments. I don’t know how and when I will get the money out. I doubt I would want to annuitize. But it could become a tax headache for heirs one day.

                    I was all set to go, but got blocked by the good people at Schwab. Turns out that I had a 3% fixed investment option, and the mortality expense fees were only 0.5%, so my net of 2.5% was greater than the roughly 1.5% I could get in a 3 y fixed annuity. There compliance dept put a hold on the transfer as it was against my interest, then they sat on the phone with me and called the insurance company, got transferred to the person who could get me into the fixed option (not available online). Then they got them to do the same for my wife’s policy (oh yes, we got two of them!)

                    I was impressed. Go Schwab.

                    Comment


                    • #11
                      Originally posted by The White Coat Investor View Post
                      This one certainly has the insurance agents in the comments section up in arms.
                      The comments section is quite entertaining.

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                      • #12
                        It would have been a great article and was definitely a bad deal but I couldn’t take the lack of any ownership or dramatic statements about the extent of the financial and emotional damages to a young dual physician couple.

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                        • #13
                          Originally posted by VagabondMD View Post

                          The comments section is quite entertaining.
                          Where are the woodworks these insurance salespeople come out from? Is there like a whole life forum they post the link to each other or something anytime WCI posts something about it?

                          Comment

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