New York life custom whole life…explain please

[nicolewilliams]

I have a custom whole life policy from NY Life that I have been funding at 1k a month for 7 years, and my wife has one as well. Mine is a 20 year policy and I think hers is 15 but I’d have to check, and then I can withdraw at 66 for retirement annually. I asked the investor about buying term and investing the rest, he said that’s fine but since I was 35 and had nothing setup for retirement then this was the quickest option. I can cash out, I will lose some invested but I think in the right areas of the market I could gain the losses back in a short period. My issue is I don’t understand finance and it seems everyone I talk to says don’t buy whole life, but when I stress it’s “custom” whole life. No one knows the difference. Can anyone help?

 

[aatif]

@nicolewilliams Custom whole life if just a marketing term Nyl uses.

Now, this may be a pretty good policy actually. NYL agents are often very good at designing this stuff to work well. Also the hate for whole life is overblown.

But the custom part is just a marketing term.

 

[jeshurun1111]

@aatif It's limited pay whole life. Custom is what NYL calls it, but the whole industry knows limited pay.

 

[guacamole]

@aatif Custom just means it shortens the pay period to less than whole life (100yo) That’s it it’s not marketing

 

[aatif]

@guacamole Custom isn't a term anyone else uses for limited pay that I am aware of. It's a marketing term. It's just the name of the product. It also doesn't mean what it seems to mean on the surface. It is marketing. It isn't nonsense, but it's marketing.

 

[guacamole]

@aatif How does it not mean exactly what it means? You can customize exactly how long you want to pay. Want to do 5 years cool want to do 17 cool, 63 cool. It’s literally custom pay whole life. It’s literally customized to the customer. It couldn’t be more clear than that

 

[aatif]

@guacamole Ok. I'm not sure why we are arguing about the definition of the word marketing. So you win. It's not a marketing term.

 

[boysitinhnd94]

@nicolewilliams Former NYL agent here- run a brokerage now. NYL has the best cash value out of all the other whole life companies. They pay the best dividend and have the best ratings. Don’t listen to the hype of buy term and invest the rest it’s bs. Your cash value is 100% tax free and you can pull from it to use the cash for what ever you want. If you want a full break down on how it works, and talk to someone who can explain it so that way it’s easier to under stand send me a message and I’ll give you a call. I have nothing to sell you, but as a former NYL agent who’s done a ton of life insurance retirement plans I can give you honest insight to what you have.

 

[nicolewilliams]

@boysitinhnd94 I sent you a message. Thank you

 

[kwb120]

@nicolewilliams Leave it alone, you will be fine.

 

[zaverax]

@nicolewilliams For NYL agent, now independent FA here. Custom whole life is a type of whole life where the premiums are heavily front loaded to cover the entire paying period of whole life (until age 100) into a much shorter window. Because there are extra dollars going in during your early years, when insurance costs are low, the cash value builds much quicker and benefits from interest and dividends much faster than traditional whole life.

While “buy term invest the difference” may still be “optimal” if you have the risk tolerance for full equities ( ex 100% VOO/VTI), for many more conservative investors, having a “non correlated asset” from a dividend paying mutual insurance company can be a relatively good way to reduce market risk associated with “sequence of returns”.

Ultimately, the strategy only works if you get near retirement with around 80% of your assets in the market, while the insurance component will require a huge amount of your contribution/premium/saving dollars.

It’s a bit convoluted, but ultimately more effective than other whole life saving strategies.

 

[nicolewilliams]

@zaverax I understand most of that. So is it worth retaining? I’m 7 years into this policy of, I believe 20 years. It’s fully funded at 240k. And from 55-66 if I understand it grows in dividend payouts….if I worded that right.

 

[atheist_1223]

@nicolewilliams I will say keep it , ask for an inforce illustration

 

[nicolewilliams]

@atheist_1223 What is an inforce illustration?

 

[atheist_1223]

@nicolewilliams It shows the forecast values of the policy. Your agent will know once you asked him/her

 

[nicolewilliams]

@atheist_1223 I think I have that at home. It’s several pages illustrating to age 100 I believe.

 

[samitefan1]

@nicolewilliams Yes definitely check the illustration and how its working based on that.

7 years into the policy, if properly structured you should be positive in cash value right now compared to your total contributions. Meaning, next year you fund $12k and your CV should increase by more.

I'm truthfully not sure what you mean by a 15 or 20 year policy? That sounds like term policy.

Whole life lasts your whole life.

And you should have cash value available by the end of year 1.

 

[nicolewilliams]

@samitefan1 It’s custom whole life. So to me it’s explained as a 20 year pay into to find the return side of the policy. I’m not really good at explaining it to be honest

 

[samitefan1]

@nicolewilliams Not sure if it's allowed but if you po0sted a screensh0t of the illustration it could help us. i saw someone do that in a different post

Just know, you should have cash value projected year 1

and your break even on your total contributions vs cash value available in the policy somewhere between years 3-8

 

[amberb]

@nicolewilliams You are likely at the point where your cost of insurance is 0 and every time you pay 1000 you cash value increases dollar for dollar