Insurance Man: Meph, why are you playing games? Why do you need me to post what the poster said before you can respond? You participated in the thread. I'm not asking the readers if the appropriate advice was given. I am asking YOU if the appropriate advice was given!
You are the proclaimed insurance expert who has said that I'm almost always wrong. Tell me why I'm wrong on this one. If I'm not wrong, tell the poster the correct answer.
I’ll quote myself to make this easy for you:
“I made two major points that nobody addressed.
1) Before a young person cancels an existing insurance policy, they should be aware of the risks if they are not currently insurable or if their insurability changes.
2) When one has a loss in an insurance contract, they should explore the possibility of a 1035 exchange. The cost basis is worthless upon surrender, but has great value if exchanged. Vanguard VA's are great for this purpose!
Meph, if my ideas are wrong, how about taking the time to educate all of us? If my ideas are right, how about taking the time to help the poster?”
PS. What in your imagination allows you to start thinking that I’m colluding with the poster? Do you think that I said, “Hey friend, start an insurance post. Everyone will blow the answer.”?
Here are the posts by the original poster that Meph is insisting on:
"After doing a bunch of reading and starting to get my feet wet with investing, i've decided i want to get rid of this policy i was duped into by a friend... also my sales agent. I bought the policy at 25yrs old and have had it for only 2 1/2 years. My premium a year is $2200. I am pretty sure if i dump it now i will get nothing and will just take my hit on the money i have donated. Do i have any options with this? I honestly don't even need any life insurance as i have no assests to protect nor do i have any children."
"My policy is a Minnesota Life Var. Adjustable Life Summit Policy with a annual premium of $2400 and death benefit of $450,000. Now i'm trying to figure out what these surrender values mean. It looks like if i surrender this today, the charge would be $3177. And i am way off on how long i've had this, sheesh, i started the policy on june 30, 2006. That just goes to show you how bad i was with investing."
The advice offered by myself, Taylor Larimore and the other posters on that thread sound right on the money based on the information provided. I would not change a single thing I said.
Little is 25, has no assets and no children and states he does not need life insurance. Little was looing for an investment, not life insurance, and his agent friend duped him and suckered him according to what he says. He is paying $2200 or $2400 a year for a $450,000 VUL he states he does not want or need.
Regarding your point #1 I see no reason why insurability should be an issue as all the insured wants to do is invest, not insure, and $2400 a year is a bit much to pay to protect insurability that was never the issue in the first place. Your advice sounds like to me that it is reasonable for him to have bought for, and continue to pay $2400 for an unneeded policy because at some time in the future he might have a want or need for insurance and be uninsurable or rated. Following that sort of thinking you would probably sell him an additional half million or so of insurance to make sure more of his future unknown insurability would be protected.
Regarding your point #2 I think it is stupid to compound the first mistake by a second mistake of 1035ing to a Variable Annuity. especially if he has to come up with additonal premium, that he probably does not have, to buy another form of insured product that he does not need. So now you want to protect his cost basis by making matters worth.
Now, getting back to what appears to me to be the real issue is that I do not believe little would have been duped into buying a life insurance policy, of any kind, as an investment had the agent not used his "friendship" as a wedge and a lever to apply psychological pressure to buy an unneeded and unwanted product. So, my advice not to buy from friends is exactly the advice I find appropriate in this situation.
meph
