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Another suckered physician getting out of universal life

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  • Another suckered physician getting out of universal life

    WCI has covered the topic of whole life quite well, but I thought I'd post this as an additional word of warning about these kinds of insurance policies.  5.5 years ago I was sold a universal life policy for $1M, guaranteed if I met my $642 monthly payments for 15 years.  I curse the day I signed that paperwork.  Emotions and sunk costs aside, I did my due diligence and analyzed different rates of return that would leave my wife/children with the same amount of money if I took the cash surrender value and the remaining premiums and invested them in a portfolio mimicking the S&P 500.  Earning anywhere close to the long-term geometric mean return of the S&P 500, even after discounting for taxes/fees, I should come out ahead in my late 60's.  Being more conservative with my estimates, the UL policy actually looked to win out in most death scenarios.  But despite all these possibilities, I decided to cancel the policy - tomorrow.

    I think the goal of many of us, myself included, is to not work any longer than is necessary, retire with comfortable savings, and enjoy that chapter of our lives with our loved ones.  The UL policy can never provide that in any robust form, and that value is immeasurable.  I have enough term insurance without it.  My kids shouldn't need this money if I teach them to learn from my mistakes and learn about finance at an early age.  I would say beware to all those being sold these policies, who still have these policies, or who are even thinking about these policies.  Per WCI's posts, there is a niche segment for which these might be beneficial, but that population is slim at best.  Curious if anyone else has faced this same dilemma.  How did you justify canceling your policy?  Anything else you considered that I hadn't?  Did you decide to keep it?  Why?  Thank you for your comments.

  • #2
    20 years ago, newly married, and starting my career in private practice, my insurance-selling father-in-law sat me down and sold me a Manulife VUL policy. Does sales get any higher pressure than that? At the time, I had no clue and bought the policy. I learned pretty quickly that it was not an appropriate vehicle for me, stopped making payments after a few years, held it a while longer for the insurance, and eventually sold it for a modest gain. (I surrendered it, technically; they use that word to make you feel like a loser for not staying.   )

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    • #3
      I've told this story many times.

      Fresh out of training, a local NWM "financial advisor" struck a deal with the local medical society to obtain the names of all new society members.

      They quickly stalked me at my office and asked to see if they could take me to dinner and offer some financial services.

      Kept saying no until finally, I agreed to a coffee after work around the corner on the condition that my decision that day would be final.

      At the time, I was fortunate enough to have already perused through much of WCI so I had a feeling I knew what they were going to pitch me. From a personal perspective, I tend to treat almost all strangers like a hardened criminal anyway so I would like to think that even without the knowledge imparted by WCI, I wouldn't have signed up for a UL / WL policy without doing my homework.

      Heard the spiel, promptly rejected them at the table, blocked her phone/email, and then instituted a new rule at the practice that non-medical personnel who show up at the office are promptly shown the exit.

       

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      • #4
        My story has been told many times, but briefly:

         

        • Med student

        • Whole life

        • 7 years

        • -33% cumulative return

        • Don't miss it

        Helping those who wear the white coat get a fair shake on Wall Street since 2011

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        • #5
          Yeah, no interest in turning this thing into some other financial product (annuity).  Just want to cut the cord and be done with them.  While not as high-pressure as Vagabond's situation, this was a father of one of my co-residents.  I'm almost positive he had his kid invested in the same stuff, which amazes me.  Interestingly, the extra cash flow allows me to put all my locums money into a 401K rather than towards a 529 or taxable retirement, thus reducing my current tax burden and creating more cash flow.  Can put the cash value plus the premiums plus the added tax cash flow towards those other funds.  Here's to a more liberated life!

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          • #6




            Yeah, no interest in turning this thing into some other financial product (annuity).  Just want to cut the cord and be done with them.  While not as high-pressure as Vagabond’s situation, this was a father of one of my co-residents.  I’m almost positive he had his kid invested in the same stuff, which amazes me.  Interestingly, the extra cash flow allows me to put all my locums money into a 401K rather than towards a 529 or taxable retirement, thus reducing my current tax burden and creating more cash flow.  Can put the cash value plus the premiums plus the added tax cash flow towards those other funds.  Here’s to a more liberated life!
            Click to expand...


            Father using son as a tool to pull in fellow doc recruits.   Cynical me is that son gets some kickback commission for it.

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