New York Life has started a newsletter on Twitter and decided to follow me, I suspect because of this real fondness I have for their overpriced term products, their love of whole life and the commissions they get from it, and last but by no means least, their sick relationship with AARP and the absolutely shameful products they sell through that affiliation.
They kicked off their Twitter experience with a Tweet
asking the question, “Does Price Top Value in Deciding on a Life Insurance Policy?” A refreshingly fair question, so let’s explore it from both sides of the aisle.
They start off their article with a couple of questions, “Price shopping online for a life insurance quote? Are you aware of the risks?” Risks? That infers there may be more than one and I, for one, get a little worried when I am surrounded by multiple risks, so we should dig deeper.
Right off the bat we find that one of the risks is that you will end up with a life insurance policy on yourself that does not include “family protection insurance”. Now I’m not knocking family protection insurance, only because in the entire article it never tells you what it is, what it’s going to do for you, and of course with New York Life you will never know the price of that little gem without having direct contact with a NYL agent.
And of course that is another risk of shopping and buying through an agent on the internet. You won’t get the opportunity to meet and build a relationship with a NYL agent, an agent that is highly educated in all the ways to suck money out of your bank account and make you feel like it’s OK, even though there is this nagging feeling that you’re probably being taken to the cleaners.
Oh, and another risk is that you may miss the opportunity to be underwritten by a company that is not known for treating people with real health issues fairly.
Oh my gosh! Then they go on to talk about the real danger. “The real danger, however, is that you could get a great deal on a product that does not meet your needs. Life insurance is a product designed for the long–term, involving possibly hundreds of thousands of dollars in ultimate benefits, with consequences that may impact your spouse and children decades from now. The policy you buy is only as good as the company behind it, including its service and its reputation.” That really puts it in perspective for me. There’s certainly no danger in having a NYL agent sell you a lousy deal on a product that doesn’t meet your needs. The truth is that the average NYL customer has either over extended their budget or under insured their family because of the overpriced products NYL offers. Doesn’t seem prudent at this economic juncture, if ever at all.
And then they just seal the deal with this gem of a paragraph. “The smart way to buy life insurance: New York Life believes that price shopping is not the best way to meet your protection needs and that there are a number of other factors to consider besides price. This is why NYLIC recommends that, when you are considering purchasing a life insurance policy.” No, I really didn’t alter that to make it look like their proof reader took the year off.
Bottom line. Price doesn’t top value, but trying to make the case that starting with a great price isn’t a good start to a valuable financial tool is crazy. And furthermore, New York Life doesn’t epitomize value in the life insurance industry. They would rather you be under insured with a whole life policy than adequately insured with a term insurance policy. They would love for you or your parents to buy their bottom dwelling life insurance products through AARP when they know full well that their is better value all over the life insurance map.
My 20 years of experience give me the knowledge and leverage to find reasonably-priced life insurance for people who have been declined or are paying more than they need to.
Ed, do you see no value at all in permanent insurance?
If my entire insurance needs were $1Million, wouldn’t getting 100k in whole (with future increase options) & 900k in term be reasonable if my budget allowed?
I like the idea of permanent insurance eventually paying for itself rather than just having death benefits.
Your thoughts?
DT, Never said anywhere that there is no value in permanent insurance. If you have a permanent need, final expenses, estate protection, those needs don’t generally go away and permanent insurance is a reasonable thing to buy.
What I have said repeatedly is that whole life is a waste of money. Universal life with a no lapse guarantee is just as permanent as whole life for a lot less money. Future purchase options? How about conversion on some of that $900k term. Doesn’t cost anything to keep that option open.
Universal life may not lapse, but that doesn’t prevent the company from sending the client a letter stating that because of unanticipated expenses, etc., their $200 premium is now $800 if they want to keep the policy. Of course, it won’t lapse as long as they do this. This happened to a friend of mine’s dad. I would NEVER feel secure with my money in a universal life policy. Are you kidding?
I completely agree with you if we’re talking about traditional universal life that relies solely on cash value to stay in force. What happened to your friend’s dad is exactly what I am screaming mad about. Agents that sell non guaranteed policies are cowards and liars.
On the other hand is the universal life policy with an external no lapse guarantee. It is guaranteed in the same manner that term insurance is. You don’t hear about 20 year term policies having a rate increase in the 15th year because the reserves are held separately and the policies don’t rely on cash value. No lapse guarantee UL’s use the same mechanism and are reliable and safe. No surprises. Thanks for your input.
Is there a cash value in the type of UL you are talking about? How does it compare to the cash value in a whole life policy, which as I have seen, has guarantees and draws a dividend when it’s a mutual company. Does the policyholder bear any risk for how the investment component performs? How liquid is it? Are there surrender charges or any type of fee that results from taking it out? How about taxes? Is the cash value free from any taxation? I have to confess to you that I’ve had a whole life policy for the last 24 years and I consider it the best investment I’ve ever made. It’s the only one that hasn’t experienced any volatility.
Michael,
The type of UL I recommend uses the same guarantee mechanism as term insurance, an external guarantee with company reserves. While it builds some minor cash value, it is not meant to be used or borrowed against.
Like you I also like a lack of volatility in my life. Knowing that all I have to do to keep a policy in force is make the guaranteed level premium payment is what I want. A UL with a no lapse guarantee does exactly that and guarantees your policy will stay in force for life. Less expensive than whole life but not susceptible to the rate changes that have made traditional UL products infamous.