My father was an executive for a life insurance company and a CLU, although he never sold insurance. He got me this policy when I was in my late teens. I assume it was pretty good at some point.
Honestly I have never paid close attention to the details, until I realized the cash value has been going down.
DW and I each got 30 year term policies when we were in our 30’s - $700K for about $700/year. We still have 10 or 11 years left, and will keep these.
The term policies are quite good. I am
Not going to make anymore comments. 
@AttorneyMother - I already have the schedule from the MetLife agent., so I know how fast the premiums can go up. In the “Non-Guaranteed Annual Premium Outlay” column, the rate increase $200-$300 / year. There is also a “Guaranteed Max Annual Contract Premium” column much higher (3x). I assume it is possible but unlikely to be that high.
The question to me, then, is how does MetLife decide the premium increase. That’s a big spread. And you won’t know until you get the statement for premium paid because it’s automatically deducted each month.
Well, at least I’m finally taking a hard second/third look at H’s and my policies and re-evaluating.
About post #6082,
I think my cognitive ability is declining. I get irritated when things get complicated. My cellphone bill for example. I am with AT&T. They have an enterprizing habit of adding a small amount to my bill, not more than $10 at time making it easy to overlook. So that’s one bill I comb through. So many items on the bill.
" And you won’t know until you get the statement for premium paid because it’s automatically deducted each month." - We’ve always paid this term annually. So we decide each year whether to keep. Til now it’s been easy decision - even with slight cost creep it made sense during the college years.
This year we dragged our feet deciding… oops - that may be what caused a small credit ding (got auto alert). I’m not going to sweat that… it’s still very high, and not sure we’ll be taking any more loans.
AM - We were already leaning heavily toward dropping DH"s term policy even when looking just at the 5 year trend given to me by the agent over the phone (from Non-Guaranteed column, where it seems to have been during our policy over the past 13 years).
But for group education I will post the related Notes from the illustration I received last week. I’m thinking it’s probably common for companies to have these “just in case” kind of clauses. With term policies, policy holders can jump out if it becomes unreasonable… so perhaps competition keeps rates in check.
Note(1) The non-guaranteed Premium Outlay shows the non-guaranteed premiums MetLife is currently planning to charge for this policy. The non-guaranteed premium are based on current factors which are subject to change by MetLife each year. You actual premium outlays could be more or less than the non-guaranteed amounts shown above but may never exceed the applicable Guaranteed Maximum Contract Premiums shown above.Note(2) Totals do not take into account the time value of money, i.e that because of inflation, a dollar in the future has less value than a dollar today.
[/QUOTE]
Others more expert than I are free to jump in, but here’s how I am evaluating my non-term policy:
(1) A policy is a contract. If I have to rely on an agent to tell me what the premium will be 5 years from now, I have no protection from exorbitant premium increases. I looked up my policy, which is a hybrid policy (vari-exceptional life) in which life insurance was wrapped around mutual fund investments and which was supposed to be better than the stodgy cash value policies that just paid a set interest rate. The company no longer issues these policies, supposedly. Attached to my policy is a one-page schedule. Clearly stated is a “Table of Guaranteed Maximum Monthly Charges.” It sets forth one $number calculated per $1,000 of life insurance. The cost is not listed as a range, but as a maximum, which I assume will be the one I’ll be charged.
According to the Table (which forms part of the insurance contract), I can be assured that at each age set forth, I will not be charged more than the Guaranteed Maximum Monthly Charge. I can project what my annual life insurance costs are thru age 94 (when the company will stop charging me premiums - Yay!). I can also see how each jump in age results in a corresponding jump in premium. Right now, I am paying $1 per year. In 5 years, I will be paying $1.39 per year. In 10 years, I will be paying $2.22 per year. It’s fairly easy to see the burn rate for my cash value and what annual gains the underlying investments have to make to keep up just with the premium costs, never mind be competitive with market “investments.”
(2) Regarding my insurance costs for the past 22 years, I have overpaid for basic life insurance by 230% (as compared to a 25-level term policy covering the same amount). I’m sure that my insurance agent was happy to benefit from the commission and my annual premiums.
(3) If I keep the thing going long enough, I will be older and possibly uninsurable except at an exorbitant rate. By then, just to keep this insurance alive, I might be forced to dump more money in to keep alive a policy the face amount of which will not make a material difference to my beneficiary, especially if I had simply invested the differences embodied in (2) for preceding decades.
(4) If I cash out now, based on my rough “lawyer’s math,” I have earned an average annual return of 7% over the basis I put in, which is not as bad as I thought it would be. But, that’s before tax on ordinary income. If I wait too long as the premiums escalate, or if the market takes a turn, then that number is easily zeroed out.
So, I will check to see if I am still insurable and get a replacement term policy if the need is still there, cash out and dump the thing and be glad that I have learned a lesson, albeit an expensive one.
7% compounded? That’s not half bad, at least at first blush.
Average annual? I took the gross return and divided by 22 years. Remember I’m not a math type.
Remember also that we’ve had 4 excellent stock market years and the underlying investments are in mutual funds (the expenses of which I have not looked into too carefully recently.)
I’m just burned about the life insurance costs, admin fees and expenses, but I have no one to blame but myself. I read all the documents 22+ years ago, including the prospectus.
The policy was sold as “tax-free,” i.e., if I borrowed against cash value and died with the loan outstanding against the cash value + face value, it would be offset and I’d have had the money “tax-free.”
@AttorneyMother, nevermind. I am not sure what you are saying.
@AttorneyMother, Average annual is different, but that’s okay; if you’re really curious, use Excel. In a sense, you earned bond-like returns at equity-like risks. Sorry. But, everything considered, you came out okay.
I’m going to name this the “smart person paradox.” I couldn’t have gotten past the first two pages, and thus was luckier than you, because I would have just turned on the TV and kept my checkbook closed. God looks after fools and drunkards, and I don’t drink 
@dstark ,
I am lucky to date. Going forward, the insurance premium will start to eat away and I’d have to worry about the market returns keeping up.
Do you both agree that barring a pressing need to keep the insurance in force, I should surrender the policy (1) at a high of the market and (2) before insurance costs burn through the gains?
@notrichenough , do not feel obligated. I am not here to impose more work on anyone. Just looking for feedback.
@AttorneyMother, I like notrichenough’s analysis.
If your insurance costs are eating into your cash out … You have to add that into the cost of your insurance.
Do you need the insurance?
I no longer have life insurance… But like ixnaybob, I am worth more dead than alive. (I am retired. My expenses are more than I make. )
You might be in a different situation.
@AttornetMother, I don’t understand insurance products beyond simple term well enough to have an opinion. In general, I believe in a moment of silence for sunk costs and then cutting my losses. But, that’s just a basic MO, and might not apply here.
I’m inclined to agree with all three of you. For the past couple of years, I’ve been thinking that I do not need life insurance at this stage and I’m in simplifying mode. I can’t predict the market and a period of correction (which would be good for “accumulation” in other areas) might make this thing look even more costly given the contractual premiums.
Thanks again.
Based on this experience, whenever I talk to a new or expectant mothers, I tell them and their husbands to get 25-level term policies while it’s cheapest. They must think I’m a life insurance agent.
When I was in college I almost entered the insurance industry and I passed all the exams. I learned one thing from that whole thing was that term insurance is basically all you need. Term is basic insurance. Every other policy is very expensive and it is like combining term + investments (whole life, umbrella policy, etc.) and unfortunately the commissions are incredible on those policies. You shouldn’t mix the two. Keep insurance and investments separate.
Just get term insurance in case you need it for replacing your income and or estate taxes and when you don’t need it anymore simply cancel the policy. Insurance policies can be cancelled anytime. My H and I have a 20 year term life policy and we are glad we have it. However, we doubt we’ll need it after 20 years and we may cancel it before then. It all depends!
When, I told people I worked on a trading floor at a stock exchange, people used to ask me, “What’s the stock market going to do? What should I buy?”
I answered “I don’t know”.
When I had legal case, I asked my lawyer what was going to happen?
He said, “I do not know”.
I had lunch with a friend today who has a court case. He asked his lawyer what is going to happen?
The lawyer doesn’t know.
I was talking to a doctor and the doctor asked me, “What do you want to do?”
“What do I want to do? You are supposed to be the expert.”
I find that experts don’t know that much. It’s hard to predict the future.
In the scheme of things, most decisions aren’t that important.
Enjoying life is important.
So funny but so true!!! I love it.