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New York Life / Whole Life Insurance / bad product

1 United States Review updated:

In 1992, I purchased their 150K whole life insurance based on their overly optimistic estimate:
pay premium for 11 years and at 70 the death benefit is 272, 955
In 1996, the revised (still overly optimistic) estimate is like this:
pay premium for 14 years and at 70 the death benefit is 206, 102
In 2006, the revised (yet overly optimistic) estimate is like this:
pay premium for 17 years and at 70 the death benefit is 164, 474
This year, the revised (don't know what to say) estimate is like this:
pay premium for 20 years and at 70 the death benefit is 154, 766
Needless to say, I feel cheated. Is this a good product? For them, not me!

OK, enough for the destruction part, now the construction part.

Here I give you two examples of using the 1, 628 annual premium through out the same period.


1. Save the money for yourself by buying 30-year US Treauary bond.

1992: 1628 * (1+0.0729*20) = 4001

1993: 1628 * (1+0.0633*19) = 3585

1994: 1628 * (1+0.0756*18) = 3843

1995: 1628 * (1+0.06906*17) = 3539

1996: 1628 * (1+0.06768*16) = 3390

1997: 1628 * (1+0.06445*15) = 3201

1998: 1628 * (1+0.0559*14) = 2902

1999: 1628 * (1+0.06113*13) = 2921

2000: 1628 * (1+0.05688*12) = 2739

2001: 1628 * (1+0.05472*11) = 2607

2002: 1628 * (1+0.05472*10) = 2518 (reuse 2001 rate)

2003: 1628 * (1+0.05472*9) = 2429 (reuse 2001 rate)

2004: 1628 * (1+0.05472*8) = 2340 (reuse 2001 rate)

2005: 1628 * (1+0.05472*7) = 2251 (reuse 2001 rate)

2006: 1628 * (1+0.05039*6) = 2120

2007: 1628 * (1+0.05*5) = 2035

2008: 1628 * (1+0.04585*4) = 1926

2009: 1628 * (1+0.0448*3) = 1846

2010: 1628 * (1+0.0389*2) = 1754

2011: 1628 * (1+0.03629) = 1687


To simplify calculation, the interest earned from the bond remains in cash.

After 20 years, the total is 53, 634


Note that there is no death protection in this scheme.


2. Put 1, 200 into 30-year US Treauary bond and use remaining 428 to buy 30-year term life insurance.

I check the web: for 32-year old healthy male, 500K 30-year term: Prudential 415, MetLife 489


Plug 1, 200 to above formula and you get 41, 287 plus 500K protection for 30 years


Remark

* I choose US Treauary bond as example assuming it won't default

* You can verify the interest rate from http://www.treasurydirect.gov/RI/OFAuctions?form=ndnld&typese/c=bonds

* for consistent reason I use the avg rate reported in August

* some years no new bond is issued, so I use previous year rate

* Tax is NOT factored in

For comparison, my New York Life number for this year is: cash value 41, 846, death benefit 171, 680

Conclusion: if you need to have insurance coverage, either DIY i.e. follow example 2, or find an insurance company that can outperform it.
In another word, don't let insurance company just take your money, they have to earn it.

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Comments

  • Pr
      16th of Nov, 2011

    Sir I would love to see your actual policy. What your saying is absolutely incorrect and inaccurate, or you do not actually have a whole life policy. It's very interesting that you are advocating a particular insurance company and seem to be very intelligent. Assuming you are as intelligent as you seem then (assuming the NYL WL was as bad as you said it is) why did you stay in it for so long if you knew the above mentioned information? I believe that you are lying... NYL did not have a set term WL product until the last 4 years, and no other company has a WL product that you can actually set your own terms like NYL (all of which you would have known being your so smart right?). Perhaps you were illustrated that it would be "paid up" however I doubt that in such a short period of time. I also do not believe the declining figures in which you boast simply bc I too am a NYL policy holder and have been for quite a long time and have had quite the opposite experience of what you are saying. Also if you have a 30 term product w/ metlife how much of that money will you ever get back? NONE of it, and chances are that since it is a term product it will never pay a death claim bc only about 1-2% of all term products ever pay a death benefit. You sir are a sham.

    0 Votes
  • Kn
      12th of Sep, 2018

    Can any one give a reason why the client need to pay longer and longer premium for his WL policy?

    If the story is true, how to explain it?

    Knowledge is a power. We will see who is a sham.

    0 Votes

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