Life Insurance Question

I have life insurance purchase some time ago and foolishly neglected to
pay one of the policies for a number of years, thereby building up a
substantial premium loan balance. I bought the policies from a friend
who was a Northwestern Mutual agent at the time. I was living with my
girlfriend at the time and there was a possibility that we would be
marrying - so life insurance didn't seem like a bad idea. Long story
short - the relationship didn't work out and I remain single. However,
I continued to maintain the policies. I am a single 44 y. o. male in
good health with net assets of roughly $200,000 (stocks, mutual funds,
money market & savings, no real estate and not counting the insurance
policies). I am determined to get my financial house in order and want
to figure out the best course to take with respect to these insurance
policies. Should I keep the insurance and pay down the premium loan on
the one policy? or would it make more sense to just close them out and
buy term insurance if i ever end up really needing life insurance
coverage? (i am not currently in a relationship). Thanks for any
advice you may be able to offer.

Status as of 2/18/06:

Policy Number: 23459***
Plan: Extra Ordinary Life
Policy Date: 03/09/1995

Net Death Benefit $59,960
Net Cash Value $2,705.90
Total Loans $5,136.42
Available for Loan $1,885.48
Loan Interest Rate 8%

Policy Number: 28465**
Plan: Adjustable CompLife
Policy Date: 03/23/1997

Net Death Benefit $123,745
Net Cash Value $8,567.16
Total Loans $0.00
Available for Loan $7,786.76
Loan Interest Rate 8%

Re: Life Insurance Question

In article <>,
"jayrems" <> wrote:

> Should I keep the insurance and pay down the premium loan on
> the one policy? or would it make more sense to just close them out and
> buy term insurance if i ever end up really needing life insurance
> coverage? (i am not currently in a relationship). Thanks for any
> advice you may be able to offer.

I'd suggest cashing them out. You don't need life insurance. If
you die, you have enough cash to bury yourself, and no one would
be financially hurt. If you have a reason for life insurance,
then buying term would be the most cost effective. As far as
an investment goes, I think you could do better investing on
your own without the help of the insurance company.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: Life Insurance Question

"jayrems" <> wrote in message
news:
> I have life insurance purchase some time ago and foolishly neglected to
> pay one of the policies for a number of years, thereby building up a
> substantial premium loan balance. I bought the policies from a friend
> who was a Northwestern Mutual agent at the time. I was living with my
> girlfriend at the time and there was a possibility that we would be
> marrying - so life insurance didn't seem like a bad idea. Long story
> short - the relationship didn't work out and I remain single. However,
> I continued to maintain the policies. I am a single 44 y. o. male in
> good health with net assets of roughly $200,000 (stocks, mutual funds,
> money market & savings, no real estate and not counting the insurance
> policies). I am determined to get my financial house in order and want
> to figure out the best course to take with respect to these insurance
> policies. Should I keep the insurance and pay down the premium loan on
> the one policy? or would it make more sense to just close them out and
> buy term insurance if i ever end up really needing life insurance
> coverage? (i am not currently in a relationship). Thanks for any
> advice you may be able to offer.
>
> Status as of 2/18/06:
>
> Policy Number: 23459***
> Plan: Extra Ordinary Life
> Policy Date: 03/09/1995
>
> Net Death Benefit $59,960
> Net Cash Value $2,705.90
> Total Loans $5,136.42
> Available for Loan $1,885.48
> Loan Interest Rate 8%
>
> Policy Number: 28465**
> Plan: Adjustable CompLife
> Policy Date: 03/23/1997
>
> Net Death Benefit $123,745
> Net Cash Value $8,567.16
> Total Loans $0.00
> Available for Loan $7,786.76
> Loan Interest Rate 8%


Please do NOT jump to surrender the policies with the express intent of
possibly purchasing Term Insurance
If and when you need it. The contracts that you currently have "In Force"
are first of all IN FORCE. Second,
they are probably standard issue or better. If you did surrnder BOTH
contract, and find (for whatever reason)
that you do NEED Life Insurance at some future date, you would then first
"have to qualify".

It would appear to me that the second policy, Adjustable CompLife being
NINE years old, and having NO
Loans outstanding, should in all probability be showing a profit. IF you are
contributing MORE than the
minimum required, then the ANNUAL INCREASE in the Cash Value should be
almost as much or even
possibly MORE than the premium being paid. Therefore, the Death Benefit COST
should be either negligible,
or at most very inexpensive. CERTAINLY less expensive than ANY Term
Insurance That you might buy today.

As to the other contract, since the information that you provide suggest a
nominal NEED for more than $123,000
of Death Benefit, (again with out sufficient additional information) appears
to be superfluous. Therefore, It would
appear that the best course of action might be to surrender THAT contract
for it's Net C/V.

If you require any additional info, do not hesitate to write.
Cal

Re: Life Insurance Question

thanks for the responses......!

the smaller policy, with premium loan balance of roughly $5000 has a
"Net Cash Value" of over $2000 - so based on what you seem to be saying
Cal, the "Net Cash Value" is in fact the cash value AFTER deducting the
premium loan.

I had managed to get it into my head that if I surrendered both
policies, the insurance company would deduct the premium loan from the
cash value of the bigger policy. That was really bothering me. But
evidently the smaller policy's cash value is even greater than the
premium loan amount...so the bigger policy actually wouldn't be
impacted.

Don't know why I was so off base - seems obvious now. Still not sure
what to do - but it feels better knowing the picture is somewhat rosier
in terms of the cash values, etc.

Re: Life Insurance Question

"jayrems" <> wrote in message
news:
> thanks for the responses......!
>
> the smaller policy, with premium loan balance of roughly $5000 has a
> "Net Cash Value" of over $2000 - so based on what you seem to be saying
> Cal, the "Net Cash Value" is in fact the cash value AFTER deducting the
> premium loan.

That IS correct. When you FAILED to pay the REQUIRED premium,
a LOAN was made AGAINST the Cash Value Account, to pay THAT premium.
Since neither the premium nor the Loan was repaid, that LOAN earns Interest,
which is then ADDED to the existing Loan, etc. etc.
In the event that the contract is Surrendered, the CURRENT outstanding LOAN
is
deducted from the TOTAL Cash Value Account, and the NET amount is then
paid out, from THAT POLICY.


>
> I had managed to get it into my head that if I surrendered both
> policies, the insurance company would deduct the premium loan from the
> cash value of the bigger policy. That was really bothering me. But
> evidently the smaller policy's cash value is even greater than the
> premium loan amount...so the bigger policy actually wouldn't be
> impacted.
>


That is completely wrong. The policies are INDEPENDENT, and their
respective Cash Value Accounts are inviolate. That is NOT a problem for
the company, as the Policy LOAN can NEVER Exceed the C/V of the contract.


The decision still remains as to YOUR perception of the NEED for one or
both contracts. Based on the earlier post, my recommendation still stands.
Cal Lester CLU

Re: Life Insurance Question

<<Loan Interest Rate 8%>>

Ouch!

<<would it make more sense to just close them out and buy term
insurance>>

Talk to your agent and see if you can *convert* them to term insurance,
so that you don't have to requalify.

John Cowart

Re: Life Insurance Question

"bo peep" <> wrote in message
news:
> <<Loan Interest Rate 8%>>
>
> Ouch!
>
> <<would it make more sense to just close them out and buy term
> insurance>>
>
> Talk to your agent and see if you can *convert* them to term insurance,
> so that you don't have to requalify.
>
> John Cowart



Generaly speaking, one can NOT "convert" a Permanent Policy to a TERM
Policy. However, there is a provison in most contracts to EXCHANGE the
contract for a "PAID UP TERM CONTRACT".

This will provide a FULLY Paid Up Term policy, for the current Face Value,
for a specific period of time. At the END of that period, the contract be
completed.
IF you DIE during that "period of time", the Face amount will be paid.
HOWEVER
if you live one day MORE than that specific time period there is no
coverage.

Once that election is made, there are NO Premiums due, and the contract
generally
can no longer be changed to anything else. Also generally speaking, once
that election
is made, there is no longer any cash value available to the insured.
Cal Lester CLU

Re: Life Insurance Question

>> Still not sure what to do - but it feels better knowing the picture
is somewhat rosier in terms of the cash values, etc.

No one knows NML policies better than NML agents. If you want to know
your best options, go to the source.

You said your friend WAS with NML. That suggests you do not have an NML
agent assigned to work with you any longer.

I recommend you contact your nearest NML general agency where your
policies are housed, and ask them to put you in touch with a qualified
agent who can talk to you and provide options. I'm a great believer in
going straight to the top. So, ask for the General Agent him/herself,
tell him/her your dilema, and ask him/her to handpick the best
available person in the network who can help you with expert guidance.
You have the advantage of young age and strong dividends on your side
so you don't want to forsake those without hearing from the ones who
actually know the products inside out and can help you understand fully
the options available to you.

That's what I would do if I were you, and that's the answer I would
give to my best friend or a family member if they asked me.

Hope that helps.

John Radgosky
Northwestern Mutual Financial Network
Fort Lauderdale, Florida

design the products you bought from your friend. Ask the NM GA to put
you in touch with a seasoned agent with designations such as CLU and
possibly either CFP or ChFC also.

Re: Life Insurance Question

<<Loan Interest Rate 8%>> Ouch!

Depending on the specifics, normally NML policies still pay dividends
on the borrowed portion. Currently around 7.4%. That helps to take a
lot of the sting away from the "ouch".

Ya need to get all the facts before deciding to go ouch, or ahhhhh ....

but ya did get the bottom line right on the money .. it's recommended
to talk to a qualified agent.

John Radgosky
Ft Lauderdale, Florida