You got 5.75% this year. Now account for where the costs were pulled out and what your real yield is. When you look at what they now claim the policy is worth is that the actual cash value, some form of death value or other nebulous value that can’t be accessed? How many pages is your contract? When did you purchase this policy and if you cashed out today what will you get verses what you have invested? What is the surrender charge to get your money back? I Stupidly bought an annuity from one of the highest rated companies around and offered a 7% guarantee. Never in reality saw anything close to that.

 

GVUL will minimize taxes on imputed income levied on term life insurance.

 

That sounds like spending a dollar to save a dime.

Having heard multiple pitches for various high cash value policies the conclusion I keep reaching is buying term and investing the difference in a tax efficient ETF works better. I haven't looked at the Delta GVUL numbers specifically, but I doubt they tell a different story. The general premise behind the policies it to bundle insurance and an investment in such a complicated manner that the buyer rarely understands exactly what is going on. The insurance company gets a lifetime of deposits with only one redemption option that doesn't involve hefty fees and surrender charges.

On the flip side. Life insurance companies are a great source of long term financing for investment property. Just to be clear I'm talking about a life company real estate loan, not a cash value policy loan.They are cash rich with a low cost of capital (ie low returns to policyholders) and expect to hold the capital for decades before returning it.
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You’re not wrong, but you’re missing the point. The company is paying the premium(not you), it offers a current year tax advantage over the company provided term policy(because of how the IRS calculates imputed income), it offers another tax advantaged savings mechanism (if you want to use it).

Not really a down side.

 

I thought this was a potential REPLACEMENT for the company provided Term Life insurance. The one the company pays all the premiums for an we just get the imputed income. By my understanding, the Company would pay all the premiums for this product, our imputed income is lower, and we get the investment opportunities for it. Makes the whole argument for buying term vs whole life go out the window. Am I wrong in my understanding of how it is going to work?

I generally agree though, if you are paying the premiums term vs whole is the conventional wisdom winner.

Hopefully we can get some more info from the Company and Union on this new product. A podcast on it, plus the other changes like the new dental options, would be great before open enrollment.

 

But we’re not talking about investing your own money. This is a company paid policy. (At least that’s my understanding.) So the question becomes is it better to have the likely higher value term policy (that pays nothing if you make it to retirement). Or a vehicle that leaves you with some value after you stop working for Delta. I’ll wait for more details and pass it to my financial advisor but it seems to be a viable option (especially for those that don’t really need the life insurance anyways).

 

No, I got 8.75….

4% guaranteed + 5.75% dividends.

If I cash out today, I’ll be around 7k more per year that what I’ve put on.

Also look at how much Mutual life insurance companies have paid in the last 34yrs.

 

I think both of you guys are missing the point of the question. This isn't about whether whole/universal is better than term in general, or on the open market. The question is about our new choice in company paid insurance, negotiated under C19 (PWA 25.G.10 if you need the reference). We get to choose between regular term life, or GVUL, and the death benefit is the same (at least originally). Why, or why not, would you choose one over the other?

 

This is what I want to know as it seems too good to be true. I get the same coverage amount but now I can get an associated cash accrual as well? Shirley, I'm missing something.

 

Exactly. Not a fan of indexed annuities or most of the non term life insurance schemes… but a premium paid by the company potentially makes it a different animal. Hard to make a real judgment until we get all the details.