Manulife Performax - Advice needed on this Life Insurance

[Rockstead]

Two years ago, the wife and I purchased two Performax policies, I'm no longer sure we made the right decision. Let's say $250k each.

initially I was told, that we would be paying the exact same yearly cost for aprox 20 years for the wife and 25 years for me, but this could increase (the amount of years to pay) slightly based on market returns and that after that no more payments would be required.

We were told that after the 20-25 years, we would essentially own these policies for the rest of our lives (no longer having to pay yearly costs), and no matter when we died, either the spouse our kids would be able to collect on the insured amount (250k each). The guarantee of leaving money is why we did this.


Can anyone clarify if this is really the case? were we mislead?


We'll also be buying some regulat term insurance for 20 years, but the performax was just an extra to gurantee that we would be leaving money for someone.


Thanks

[Rockstead]

bump

[lasallejai]

Being a CFP(Chartered and Certified) for over a decade I am very familiar with this type of life insurance polices you currently own, and please allow me to share my understanding with you for a little bit.

Performax by Manulife is a traditional Whole Life policy with only one thing guaranteed--the GCV, Gauranteed Cash Value. I am sure you can easily look up this line in the proposal ledger statement, and in the policy contract itself.

However, the premium payment period is not guaranteed. The abridgement(paid up) period of the policy is based on current dividend scale projection only, and it may be elongated or shortened according to the future dividend released by the insurer, Manulife in your case. The dividends are not really dividends, they are actually return of over charged premiums. Based on investment returns of the insurer and actual claim experiences return of premiums are paid back to the policy holders as so called "Dividends". I copy this from Manulife's website: "Performax is a participating policy. This means that you may receive dividends. The premium you pay for your policy is based on estimates of many factors, including return on investments, operating expenses and the cost of paying out death benefits. If the results are better than the estimates, a portion may be distributed to you, the policy owner, in the form of a dividend.

Each year, Manulife Financial's Board of Directors determines whether to declare dividends and the amount of dividends (based on a dividend scale) to distribute to participating policy owners. Dividend scales are not guaranteed and may change based on the return on investments, operating expenses and the costs of paying out death benefits. It's important to note that these dividends are not the same type of dividends paid to those who own shares of Manulife Financial."


Insurers who market this type of policies would usually show you two scenerios based on two different dividend returns in their proposal ledger. They call them current rate and the other, adverse rate, and the adverse rate is usually 0.5 to even 1% less than the current one just to let you understand how much a difference it can be in 20 or even 30 years in term of total cash value(TCV) if the rate falls. The total cash value is the combination of the Guaranteed Cash Value(GCV) and the Dividends returned to you every year.

Back in the 80's when interest rates were extremely high this type of policies were very popular, but when the recession hit in the early 90's interest rates began to drop and the companies who had issued this type of Whole Life policies got into big trouble when all of the projections they had made in the 80's were all off. Class act and individual law suits surfaced every where for almost 7 years and Companies like Sun Life,and Manulife paid hefty compensations to their policy holders because of that.

If you prefer a gauranteed payment policy Performax is not the proper way to go, because you are just hoping that the projection will hold true. instead, you should either look for guaranteed paid-up term or paid-up universal life policies. For example, Industrial Alliance offers Universal Life policies with 10, 15 or 20 year paid up options. Almost all insureres offer paid-up term products, and even Manulife have their own called Lifewise 20.

If you need any other information or free advice please feel free to write again. : )

[Rockstead]

Hi,

I never got to thank you for your reply. I don't think my agent had our best interest in mind when he recoemmended this, from what I understand it is a very high comission product.

I did not renew the policy, and thankfully I only lost 2 years of payments, although very expensive payments.

I now have a term policy that is worth 4 times as much, and I'm paying less than half of what I did for the Performax.


Thanks again.

[blackhawk]

sounds like my experience buying a whole life policy from a relative!

never again, term life all the way

[Rockstead]

sounds like my experience buying a whole life policy from a relative!

never again, term life all the way

Oh that makes your situation even worse, it's one thing to get ripped off by someone you trusted, getting ripped off by family is even worse. Must have been tough to deal with.

[Cleveland612]

I'm looking for low-cost term insurance for my wife and I. I'd like to avoid giving out my personal contact info to a bunch of commission starved Insurance guys while comparing rates. So far, each company that I have contacted wants my home telephone number and address so that a "Representative" can contact me at home. Yeah right!
Can anyone reccomend a reputable provider for low cost term insurance? Preferably one that has their rates accessible through a website.
I want to buy in increments of $1K, $10K or $100k and pay monthly. No hidden agendas and no interest in my financial investment portfolio.

[Audiogenic]

The two tallest buildings (errr crooks) downtown are the BANKS and INSURANCE companies.

[pretzzzzz]

^ for sure

[lasallejai]

Rocksted:


You are more than welcome, but one thing though I like to add, an insurance policy that pays high commission does not necessarily mean it is a rip off product. The whole life products out there, in general, pay the agent or broker a hugh sum in the first policy year rather than leveling out the commissions for 5 to even up to the life of the policy. Term policies seem to pay the least, but then they pay the agents and brokers an annual renewal commission as long as the policy is in force--it adds up. : )

[lasallejai]

Cleveland612:


There is a insurance brokerage software out there called LifeGuide that compares all the insurance companies' products out there, except Whole Life policies, by means of premium cost. As long as you can locate a broker who uses the software for shopping policies for his or her clients you are set. If you cannot find one who has it, then you can PM me with your birthdate, gender and whether you smoke or not, and I can point you to the best company out there for your information given.

[vincevoltaire]

I'm looking for low-cost term insurance for my wife and I. I'd like to avoid giving out my personal contact info to a bunch of commission starved Insurance guys while comparing rates. So far, each company that I have contacted wants my home telephone number and address so that a "Representative" can contact me at home. Yeah right!
Can anyone reccomend a reputable provider for low cost term insurance? Preferably one that has their rates accessible through a website.
I want to buy in increments of $1K, $10K or $100k and pay monthly. No hidden agendas and no interest in my financial investment portfolio.
When buying life insurance, you should not make the price the only criterion. You should first evaluate how insurance-worthy the company is. What good is a cheap life insurance from a disreputable company that may: (a) go broke in a few years, or (b) give a hard time when it's time to claim the life insurance. Take a look at various ratings for the company first - check the A.M. Best, Standards and Poor, Moody's, Fitch, DBRS ratings for each company. Then, you can start doing the price comparison.

[Rockstead]

The new broker that I'm talking to recommends not going for a term 20, but instead to go for a term 10 with a guaranteed rate for the next 10 year after that, the next 10 wil be more expensive but he said I won't have to renew with the guranteed rate and that I'll be able to get a lower rate.

He told me that it is better to take a ten year, and then to renew again for another 10 years and it will end up being cheaper than taking a 20 year.

You guys agree?

[lasallejai]

Yes, provided you are still in good health though. Most often our health would only deteriorate instead of improve as we age; therefore, chances of getting rated for sub-standard risk or declined are higher after 10 years. Who can guarantee insurability???? I am sure you have to re-apply all over again after 10 years to get a new 10 year renewable term policy for another 10 years.

For a 35 year old male, non-smoker, $500,000 costs $32.00 for a 10 year term and $51.75 for a 20 year term, but if you could re-apply all over again after 10 years for a brand new 10 year term policy, then based on today's rate a 45 year old male would cost $62.91. It would be about $11 more expensive than having a 20 year term policy in the 11th to the 20th years, but in the first 10 years you save about $19 a month. The catch is insurability after the first 10 years if you choose 10 year term now, because there is no guarantee. If you have to stick with the existing 10 year term policy due to health problem(s) the renewal premium for the next 10 years is $140 a month, which is much more than a 20 year term policy, which remain level for 20 years at $51.75.

[ShopperfiendTO]

If you're looking for term rates, you can try www.kanetix.ca as well.

I think reliability of the insurer is a very important consideration. I have a friend who has disability insurance and is having a h*ll of a time trying to get benefits because the insurer is denying the claim and throwing every excuse it has, and no doubt will be demanding evidence more thorough than an encyclopedia.

Of course it's fair to screen for bogus claims, but once something tangible is provided (e.g., doctor certification) to support the claim, that should be enough to just get to verification instead of commencement of denial tactics.

It's one thing to offer an umbrella while it's sunny out; it's another to actually give it when it's raining.

BTW, term and whole life are two different insurance products meant for two different purposes... term should be used for temporary coverage during times of heavy debt (e.g., to cover the mortgage in the event of the breadwinner's death before it's paid off) whereas whole life is more of an estate planning product.

If you buy whole life for term purposes, you're just paying too much in insurance premiums (i.e., you're buying bells and whistles). But if you're buying term for whole life purposes, you haven't really bought anything at all because the point of whole life is certainty of pay-out and for term, a pay-out is still an uncertainty because whether or not you get the pay-out depends on when you die rather than knowing that you will get a pay-out on your death.

[Rockstead]

If you're looking for term rates, you can try www.kanetix.ca as well.

I used an above poster's advice and found http://www.winquote.net/ on the lifguide.com site.

It gave really accurate quotes for Term insurance, the lowest rates from Kanetix were over $200 more.

[lasallejai]

That is right! Kanetix only has access to certain number of insurer's insurance products' rates, while Lifeguide has all the insurers' rate included in their survey for the whole Canada, which is much more accurate for comparison's sake. I always rely on Lifeguide when I look for term and paid up term products for my clients.