TLDR: I’m in a whole life policy and trying to find out if I should get out and, if so, how to do so
Hi all,
Looking for advice re: a Guardian Whole Life 99 policy I started 7 years ago. I signed up with a fee-based adviser, who noted that, given my income—which has since, steadily grown—I should sign up for this policy. I naively didn’t realize that she was fee-based, and figured the policy made sense based on her recommendation. Now, years later—and with some misgivings that have grown with reading—I believe this was a very poor investment where the diversification, insurance, and yield could better be realized through other means. I get somewhat confused by the jargon, and the cynical side of me believes that’s part of the intention. However, I’m looking for some disconfirming bias telling me it’s a good investment; and, if not, some recommendations on what to do.
Attached is a pic of the policy details. I pay 997.29/month and 944.17 goes to the cash value of the account (5% management fee goes to my adviser or…?). The current cash value of the account is 49,371 whereas the cost basis has been 83.739. When that settles into my brain, it makes me nauseas. I was told that a benefit of the account is that it can be used to borrow money; with a loan interest rate of 8%, this seems absurd. I did convey my misgivings to my adviser; she noted that the cash value is growing each year by far more than the premium I am paying and that I should consider additional insurance. I remain skeptical that this is a good long-term play and suspect that, given the above, if I surrender the account, I will be paying a ~34k “stupid tax.”
About my family: collective income of 600k (was ~250k at time of policy start), HCOL area, rent apt, NW around $1.3M
Questions:
1) Are my suspicions off and should I stay in- or should I surrender the account and go for term life insurance and knock this up to me being naive/dumb and find a fee-only adviser?
2) the 5% management fee-> does that mean it goes to my adviser? If so, seems like an absurd skimming off the top? Or maybe I misunderstood the details (I feel pretty simple-minded about this)
3) if I do surrender the account, is there a way to salvage the loss? I read about a 1035 exchange by exchanging the cash value into a low cost variable annuity. I’m not sure if I have this right (and it seems hard to fathom having enough gains where this occurs), but would this essentially mean I have an account worth approximately 50k, with the first ~34k of generated yield being tax free?
4) am ultimately looking for help figuring it out in depth. Who is the best person to guide me- a fee-only adviser or a CPA accountant?
Sorry for such a wordy question.
TLDR: I’m in a whole life policy and trying to find out if I should get out and, if so, how to do so
Submitted August 05, 2018 at 06:54PM by nbcue2 https://ift.tt/2vCyCxX
