The Visible Policy
Page 10, Final Remarks

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Conclusions?

Ok, finally!  As I stated in the Introduction, The Visible Policy is a large site.  Some of you may have jumped here directly, though, and are curious as to "the bottom line".  Those who have read or skimmed through the site will not be surprised by the following conclusions concerning my policy.


Differently?

As I began this site, I was quite ignorant about life insurance.  I have learned a lot since then.  It may even be accurate to refer to myself as an "expert" concerning participating whole life insurance policies from mutual life insurance companies or societies.  (Hey, if you author a serious 25+ page site on Russian ballet in the 18th century, I guarantee you will become an expert on that!)  I do not know much about related issues such as sales or estate planning, but I do know how the policies work.

If I knew in May 1996 what I know now, are there things I would have done differently?  Yes, but let me state up front that, all-in-all, things seem to have worked out quite well as is.

  1. Research more.
    (No, I don't mean author a life insurance site before buying the policy. ;)  In my case I had a reason to need life insurance, and I phoned a New York Life agent listed in the phone book.  He came over, discussed various NYL policies, and left me a number of brochures.  I ended up choosing whole life because it was the only permanent policy type offered by NYLIC itself.  The other policy types were from a wholly-owned subsidiary called the New York Life Insurance and Annuity Company (NYLIAC).  For reasons that are difficult to explain, I wanted a policy from the "real" company.  Thus I phoned my agent and told him that I would purchase a $100,000 whole life policy.

    I should have also:

    • Fully understood the differences between Participating Whole Life, Universal Life, and Variable Universal Life insurance.
    • Spoken with other agents of other companies.  I did no price nor benefit comparisons.
    • Spoken with independent expert about the options being considered.

    Basically, I lucked out.  It suited my temperament and desires to acquire a policy with strong guarantees and conservatively invested policy reserves.  This is what I got, even though I did not know it at the time.

  2. Spoken with my agent more.
    I have a good agent.  (Actually there are two, a father and his daughter.)  After the first policy year, I have not communicated very much with him, although he periodically gives me a call to touch bases.  Thus I have not taken full advantage of his knowledge and experience, and for which the commission on my policy is paying.

    (Once I started this site, I gained half an excuse.  One of my goals for The Visible Policy is to document it independently.  Just regurgitating what someone else had been taught did not seem as interesting or useful as analyzing the policy with my background and experience in engineering.)

  3. Overfund more.
    This is not a choice for everyone.  Even if the option is economically feasible, many are perfectly satisfied with funding a policy with minimal out-of-pocket dollars.  But I could have afforded to put more into the policy from the very first year, and I would have desired the significant gain to both death benefit and cash value.

  4. Buy term and invest the difference -- in whole life!
    I did not realize until today (21 Sep 2010) that one could do this.  Here, I'll let an actual actuary describe it:


    Your policy has performed better than a lot of regular whole life policies I have seen because you used the OPP rider to overfund the policy. However, you could have made it even better when you purchased the policy many years ago. What you have been using is the unscheduled OPP rider, a better way is to use the scheduled OPP rider combined with the DOT rider with a very small base amount. Most of the commission and company policy fees are based on the base amount. So if you had made the base amount as small as possible, the cash value growth would have been much more efficient. For example, when you first purchased the policy, you can make the whole life base amount as $25K and add a DOT rider as $225K, so that the whole life total face amount was $250K. In that case, you might have been eligible for the preferred class at that time. The commission and expense would be minimized. Your base premium would be very small, and you can direct the remaining premium dollars to the scheduled OPP. You would still pay the same total premium to the policy, but the cash value growth would have grown much faster because of the design of the policy.

    DOT stands for "dividend option term", and it allows you to have extra term insurance on top of the whole life (WL) insurance.  Basically what 'actuary' suggests is to buy a low amount of WL and a much larger amount of term within the WL policy.  Then you schedule OPP payments so that the WL paid up additions eventually replace the term death benefit.

  5. Write less.
    You are not the only one who thinks this site is a bit, well, extravagant.  I sincerely hope that you did find some of the information to be interesting and useful.  Find being the operative word — I know I am a wordy son-of-a-gun, and for this I apologize.

    If you have any suggestions, questions, or comments (positive or negative), I would be very interested.  You can click Rich to e-mail me.


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Accesses since 2 September 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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