The Visible Policy
Page 1, Motivations

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The Visible Policy exists to accomplish several goals.

Questions and Answers

These are not exactly "frequently asked questions".  Until you-all start asking things, please settle for these questions infrequently asked.

Modeled Strategies

The following pages compare five different strategies relating to life insurance.  For compactness, each chart abbreviates the strategy name as described below.  The charts were generated by an spreadsheet.

  1. Minimum Term+Invest ("min T+I") Strategy
    The first law of a life insurance site is compare permanent insurance to a "Term+Invest" methodology.  Permanent insurance is generally much more expensive than term insurance.  So, if you bought term insurance and invested the extra money yourself, which would be "better"?  I put better in quotes because there are so many variables as to make the question impossible to answer in a general way.  At least this site has numbers and details.

    The word minimum means minimum out of pocket compared to the other Term+Invest strategy (5).  This is the same amount of out of pocket cash used in next strategy.

  2. Base Whole Life ("WL" or "WL Base") Strategy
    This begins as New York Life's policy illustration provided by my agent.  The "illustration" consists of long columns of numbers printed out on paper.  These were copied into the spreadsheet.  A lot of additional columns were added to those provided.  I attempt to deduce what is really going on, and other columns allow comparison with the other strategies.

  3. Whole Life with Option-to-Purchase ("WL w/OPP") Strategy
    My actual strategy has me "paying ahead", ie, I am sending more money than I need to, beginning the very first year.  My policy allows this under its "OPP" rider (Option to Purchase Paid-up additions, described in more detail later).  Overall, I plan to spend about 50% more than my policy illustration predicts is necessary.

  4. Whole Life with Extra Payments ("WL w/XP") Strategy
    The first 12 years of this strategy are exactly the same as #2.  However, out-of-pocket premium payments are made for several more years.  Premiums are due for the life of the policy, but NYL's policy illustration projects that it might become self-supporting after 12 years.  That is, dividends and already accumulated extra value are used to pay the premiums.  But what would happen if a policy holder decided to pay the premium himself for a few more years, even though it is not actually necessary?  The total amount invested in this strategy is the same as OPP, but "back-loaded".  Extra money does not go into the policy until after 12 years are up.

  5. maximum Term+Invest ("max T+I") Strategy
    This is similar to the minimum T+I strategy, but with the same extra amount of out of pocket money as the OPP strategy.  Like WL w/OPP, these payments are "front-loaded" to get more money invested sooner.

When referring to the mathematical aspects of a strategy, I use the term model.  Technically, the spreadsheet "models" these strategies based on input data and formulas I provide.  If the source data is incorrect, or I use the wrong formulas, then the model is flawed.  Any conclusions made by a flawed model about a given strategy are obviously highly suspect.  My actual spreadsheet is available for download so that other people can check my work.  Also, being a spreadsheet, people can alter the models to do various "what if" scenarios.

Tips and Style

I have tried to make this site easy to use and consistent in style.  It covers a complex topic in an in-depth manner -- that is my only defense.  You are the final judge of how good of a job I have done.  Please be merciful!  Here is an overview of features meant to make using this site a bit easier.

Accesses since 6 June 2002
last modified 22 November 2010
2002 - 2010 by Rich Franzen

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No content within The Visible Policy has been approved, authorized, or verified by New York Life or any of its representatives.  I have attempted to fairly and accurately portray the policy, but there are likely to be mistakes.  Over time, I shall endeavor to correct any misinformation found herein.
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