Northwestern Mutual

AFAIK they closed that 'tax-free' loophole in '95 or '85. I don't give it much consideration, because it was closed long before I could have taken any advantage. Old accounts are 'granfathered' however.

My dad has one of these types of accounts. To my knowledge they have treated him fairly.

He is thinking about ditching it and taking advantage of the much better returns in real estate.

Slowly I am enabling him to take bigger risks (for bigger gains later in life.) So far all his investments have been very very conservative.

In short, don't bother with those wankers.

 

this sounds like a whole life policy. pretty standard stuff, still available today as far as i know. i have one. i wouldn't put all my money into whole life, but if you have to have life insurance, and can afford the premiums, it's an interesting diversification for some small chunk of your money.

the interesting thing about whole life is that you pay into it periodically a set amount based on the coverage you want. basically the first 1.0 to 1.5 years of premium pays for the insurance coverage. after that it's largely just a tax-deferred savaings plan, that you can in fact borrow from.

the trick is to work with a firm that pays out a good rate of return per year. historically speaking, investing in market indices over long periods of time will generate a better return on your money though. you can go buy a term life policy if you need the life insurance - much much cheaper.

this product offers two interesting features, imo.

1) some polices set a floor on the annual ROR. during the recent crapola market years i was still earning near 10% per year on that money.

2) you can borrow against your accrued cash value. it's virtually free borrowing. you can in fact never pay it back, and when you die the taxes get covered out of your estate/insurance policy.

3) the funds accrue tax-deferred. unlike an IRA or 401K, you can dump a lot more money per year into one of these.

do your research. this product is NOT right for everybody, imo.

doody.

PS: i'm ont a financial advisor. i just play one on the net.

 

My family and I have been NWML customers for nearly 20 years. I have 5 whole life policies with them and they have always treated me with the utmost respect. I use the whole life policies as a diversification tool in my portfolio. Recently, I was approached by my agent to see if I wanted to purchase another policy. I told him that I felt adequately covered at this point and he respected my opinion and said that if and when I wanted to add more policies, that I should give him a call.

IMO...NWML is one of the better companies to do business with. Of course, there will always be reps that generate a lot of complaints. I guess I have been lucky to work with a few agents that are very good.

 

I was going to use one of these as my "$300,000.00 Cigarette Boat at 50" vehicle, but chose some other alternatives.

Term life is for insurance, these are considered investments, more or less.
Not sure they out perform the S&P 500 over time, but as mentioned above you can access the cash for other uses, if needed.

 

Doody and Future328driver both make excellent points. I invest in a couple of these thing myself, though through a different company. These things are an interesting ancillary investment. NWML is an excellent company as is New York Life. IMO for best results and information call the main office(not a agent branch) and find out who the top 3 salespeople are. Deal with those people. The best tend to be that way for a reason.

 

fwiw, if you're shopping for these sorts of things, check out guardian - i'm a fan (and a customer).

VIOLENT agreement on finding the top sales guy in your area. it'll make the process WAY easier.

for the avoidance of doubt, i do not believe that ANY whole life policy will beat the general market indices (tax treatment aside).

fwiw, here's some data i collected at some point for three indices and Guardian's whole life return back some decades. the most recent data point is for CY 2000 and the oldest data point was for 1958. each row represents the AVERAGE ANNUAL RETURN for the period in question. so looking back 25 years from 2000, Guardian was returning 9.05% per annum and the S&P was returning 12.17% per annum (these were calcuated by Dec. 31st market closes). since the returns are tax deferred though, the numbers are not too shabby when you rip taxes out of your index returns. and except for maybe 529 accounts (where you'll pay a 10% penalty on eventual withdrawal, and which are NOT supposed to be used as personal investment mechanisms), i'm not aware of any other tax-deferred investment instrument into which you can pour nearly arbitrary quantities of cash.

i don't believe any of these whole life funds are secured or insured though, so if NWML or NYL or Guardian or whoever goes belly-up, i think you're screwed blued and tattooed.

doody.