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Photo by: dave mcmtSo I’ve done it - after debating for about 2 months and trying to convince myself that I DIDN’T make a bad investment in getting in on this, I’ve come to my senses. I admit it, I made a bad mistake 5 years ago to purchase my Hartford Life Universal Life Insurance policy. Over that 5 year period I was putting in $205.00 per month to be “invested” in ITHAX; not completely invested in it; honestly, I don’t know how invested I was in it. I straight out asked my agent “Is my investment based exactly on the ticker symbol ITHAX?” She responded back with,

“Well, not exactly. It is difficult to explain, but yes, some of your assets are in ITHAX, but we can’t tell exactly how many shares you own at any given time. Just wait for your monthly statement.”

Are you kidding me? First of all, I want to see my investment when I want to see my investment. We’re not in the 1980s anymore. I’m a GenX’er that has grown up with the internet. If I can’t see something online, that’s another hard strike against them.

Photo by: dave mcmt

Furthermore, how is that an “investment” then? Two terms to consider in insurance: SELLING and INVESTING. They are NOT the same word, and shouldn’t even be used in the same sentence generally. You are SOLD an insurance policy. You are not INVESTED in an insurance policy. They should be completely separate entities and treated as such in your net worth and balance sheets. You are SOLD car, home, and LIFE insurance. You INVEST in stocks, bonds, and mutual funds. Don’t get them confused.

Needless to say, she wasn’t completely happy with my choice to opt out of paying her salary each month. But they’ll be like that, they want you to stay in because you’re making them money. Take this number in. My $205/per month I was “investing” with her over the 5 year span made me about -$3,000. Yep, that’s right, that is a NEGATIVE number. I had put in $12,300 over 5 years, and my “investment” is worth $9,292 as of December 1, 2007. If that’s not a bad investment, I’m not sure what is.

I never took the Suze Orman view of Term Life insurance very seriously as for whatever reason I was under the spell of my insurance agent. My agent is a very nice lady; nothing against her (aside from taking my $) but she is just trying to make a living also - I have nothing wrong with that. But I’m out from under that umbrella now and am totally onboard with Suze and Dave Ramsey in the insurance piece.

Photo by: dave mcmt

CubeFarmer has pretty much written the exact same thing about their whole life policy. It’s crap, and Universal is similar. I can’t begin to explain how much I relate to the article. Almost to the “T”. I got in shortly after college because of relatives advice also, and here we are years later. One BIGGER caveat though is that the surrender charge is RIDICULOUS. My 9k investment, if cashed out now to find a new investment/insurance is going to take almost 4k in surrender charges!!! That’s almost HALF of my “investment” in there!

I’ve got an email in with her now inquiring about my options going forward and how to mitigate the surrender charge, but I’m pretty sure it’s similar to the Edward Jones ROTH IRA ladder structure, but stretched out over a longer period, which I believe is 15 years; one thing is for sure though, she’s not getting that $205 payment as soon as I find a decent term policy…

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Tags: Financial Education, Insurance, Investing, Net Worth, Portfolio, ROTH IRA, Retirement //