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I thought I should start this thread given the depressing length of the "Inappropriate Whole Life Policy of the Week" thread that I just contributed to. I want to start a more uplifting and inspiring type thread of getting out F*** out of this stuff.
My high school buddy turned Northwestern Mutual financial "adviser" screwed me into buying whole life for me and my wife despite having $360K in student loan debt. 1 million-dollar policies paid up at 65. Premiums were about $14,000 for each us, $28K total per year. After 7 years, my wife's policy cost basis was $92,000 and the actual cash value was $67,000. I've now 1035 exchanged my wife's policy into a variable annuity at Fidelity
I'm about to do the same for my whole life insurance policy as my premiums are paid up until this month. Cost basis of $72K and current cash value $50K.
I'm so glad I got out of this! Instead of now paying the $28K in premiums this year, I maxed out the backdoor roth for me and wife this year!
That only amounts to $12K as you guys know. In all honesty, me and wife are planning to blow the rest of the money on vacations (sorry Jim- I swear we'll use next year extra cash an put in taxable brokerage account).
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.
My high school buddy turned Northwestern Mutual financial "adviser" screwed me into buying whole life for me and my wife despite having $360K in student loan debt. 1 million-dollar policies paid up at 65. Premiums were about $14,000 for each us, $28K total per year. After 7 years, my wife's policy cost basis was $92,000 and the actual cash value was $67,000. I've now 1035 exchanged my wife's policy into a variable annuity at Fidelity
I'm about to do the same for my whole life insurance policy as my premiums are paid up until this month. Cost basis of $72K and current cash value $50K.
I'm so glad I got out of this! Instead of now paying the $28K in premiums this year, I maxed out the backdoor roth for me and wife this year!
That only amounts to $12K as you guys know. In all honesty, me and wife are planning to blow the rest of the money on vacations (sorry Jim- I swear we'll use next year extra cash an put in taxable brokerage account).
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.
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