joec@u1100a.UUCP (Joe Carfagno) (09/15/84)
[this bugs for you...]
I'm looking for information about Universal Life Insurance policies
(also known as flexible premium adjustable life). New York Life offers
it, but I'm sure others do to. Where is a good place to look for
information? Anyone have it, used to have it, or is going to have it?
Thanks in advance for the UNIX mail responses...
Joe Carfagno {allegra,pyuxww,ihnp4}!u1100a!joecpmn@pyuxv.UUCP (P. M. Nauman) (09/18/84)
About a year ago I cashed in the ancient life insurance policy that my parents got for me at birth and had faithfully paid for 23 years. I rolled the proceeds over into a Universal life policy that was sold to me by a smooth talking insurance salesman who was promising a) ~12% tax-deferred yield on the cash value of the policy b) fixed low cost insurance He went ahead and got me a policy for $200,000, when all I wanted was one for $50,000. He assured me that once the policy was approved we could lower the face value. When I finally got the policy from him (it took him almost 2 months) I found that the face value could only be changed after 2 years. So, I'm stuck paying for insurance that I don't really need for another year. Last month I received my policy statement and got a bit of a shock on several points: - the 12% (actually averaged around 11.5%) was only paid on funds in excess of $800 - the first $800 earns only 4% !! This meant that my $1200 only earned around 6.5%. - my initial premium ($1200) and all future premiums are subject to a 2.5% load to pay for a guaranteed premium payment rider that I did not ask for. - the cost of insurance was indeed reasonable (about $1.30 per $1000 as opposed to ~$14 for the policy my parents gave me) but that was offset by the fact that I was paying for 4 times more insurance than I needed. I checked the policy forfeiture terms and loan provisions. Sure enough, there was no way to get any money out. The surrender charge in the second policy year is 96% (!!) of the cash value. Furthermore, one may only take out loans against the surrender value, in this case 4% of cash value. What this all boils down to is that my money is stuck in the policy. In about a year I can lower the face value of the policy but by then the cost of insurance will have eaten up about half of my original $1200. I can then let the cash value slip to zero and either continue to pay it as term insurance or let the policy lapse, neither of which is all that bad. So if I were to offer any advice at all about Universal Life it would be that it is great for insurance but it's not a very good investment. Also, (this probably goes without saying) make sure you know what you are buying - READ the policy. Paul Nauman pyuxv!pmn Bell Communications Research
eder@ssc-vax.UUCP (Dani Eder) (09/19/84)
[18 Sep 1984]
For a very good discussion of all types of life insurance,
I reccommend a booklet published by the American Institute for
Economic Research, Great Barrington, MA 01230. The cost is
two or three dollars. Write and ask for a list of their
economic related booklets. In the insurance booklet they
first explain the differences among the types of insurance
(term, whole life, universal life), then rate insurance
companies by cost.
Since they do not sell insurance thesmelves, they have
no reason to be biased, which is a problem with any type
of financial advisor who has something to sell (stock brokers,
life insurance salesmen, bankers).
Dani Eder / ssc-vax!eder /Boeing Aerospace Company