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A shocking dirty little secret of Universal Life policies: you LOSE all your policy's cash value when you croak. This is true of Transamerica’s Financial Foundation Indexed Universal Life (FFIUL) policy and all other xUL policies.

Check out the two pages here. These are from a real FFIUL policy. An agent issued this last winter from a Northern California WFG office. Go to page 5 and read how the FFIUL defines “beneficiary.” That def makes clear your heirs receive ONLY the death benefit. You find no provision that lets you pass along even a single peso of your FFIUL's cash value to your family or friends or any other entities.

For example, let’s say you bought the FFIUL with a half-million death bennie. You pay into it over many decades and accumulate an equivalent half-mil in cash value. Your total policy value and death benefit equals a cool million dollars. *However*, when you go toes up, Transamerica KEEPS half of your million dollars. Transamerica gives the $500k death benefit to your heirs. But it TAKES your $500k of cash value.

Alas, this awful FFIUL problem is common among generic pre-packaged xULs. Neither this flagship policy from WFG, nor any other off-the-shelf UL, VUL, and IUL policies from, Pacific Life, Nationwide, Voya, or big carriers, let you pass on your policy’s cash value to your heirs. The NAIC (National Association of Insurance Commissioners) makes this fact crystal-clear. Please google this string: “insureuonline consumer life FAQs” to find the following:

“Q: What happens to the cash value in my policy when I die?

A: … No matter how much cash value you may have had in the policy the moment before you died, *your beneficiaries can collect no more than the stated death benefit*…

Your policy’s cash value matters massively. For two reasons:

1) It’s YOUR cash. It’s what you realized AFTER you shelled out to Transamerica its COI (Cost of Insurance) charges and its many other charges and fees for covering you with life insurance. Why should Transamerica keep your cash? But that’s precisely what this company and virtually all other xUL issuers do.

2) The less cash value in your FFIUL to offset your death bennie, the higher COI charges you must pay. These charges start to blast into the stratosphere when you hit the “knee of insurance” in your 50s and 60s. The less cash value you have to mitigate soaring your COI charges, the sooner these charges WIPE OUT your cash value. This forces you to pay enormous premiums or let cancel your FFIUL. Then you lose *everything*--your cash value AND your death benefit.

Bottom line: The FFIUL and other standard xUL policies are LOSE-LOSE for you. If you keep low your policy’s cash value, usually by converting into death benefit, then your late-life COI expenses will destroy your remaining cash value and blow your policy to smithereens. On the other hand, if you choose a level death benefit and choose to accumulate your cash value, then your heirs lose a ton of your money when you die.

Thanks “Ex-WFGer” over at Fin*nce Guy for most of this data and for the policy materials he or she posted on that site. If you’d like to read that commenter’s 2 September convo with Corona CA WFG agent Bryan Bravo, please search on this string: “Fin*nce Guy WFG” replacing the “*” with an “a.” Once there, search on “FFIUL a total non-starter” to reach the first message in that exchange. Then you can read that thread while scrolling up.

EndMLMAbuseNow wrote the review because of "ripoff products" at World Financial Group and attached photo s. Reviewer claimed that he or she wants World Financial Group to read this review and look into the issue (if any).

The most disappointing in user's experience was harmful products and deceptive sales practices. The author asks this business to immediately contact him/ her to briefly discuss his/ her negative experience with the company.

We collected other reviews about products and/or services offered by World Financial Group and transamerica life insurance for you to read. This information may help you with your purchase decision.

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Anonymous
#1501133

The statement that all cash value policies keep your cash value is absolutely false. There are at least 2 options to choose from when you purchase a policy and you have the option to switch between these options at anytime.Option 1 = Level Death benefit.

This benefit is what you are referring to and what you purchased. As your cashvalue increases the internal charges in the policy are adjusted to the new amount at risk to the company. (Death benefit minus cash value.) you are getting exactly what you pay for each year.Option 2 = Increasing Death benefit.

(Death benefit + cash value) with this option the internal charges are higher because the net amount of risk to the company increases each year as your cash and death benefit grows. Side note, with this option less money will go to your cash value to borrow from later as aposed to the option1.

Anonymous
#1485868

World Financial Group is a joke, and they should not be allowed to provide financial advice.This article is absolutely incorrect about IUL's. Simple misunderstanding of contractual language.

Cash Value's are technically not separate from your death benefit. When you look at your statement for your $500,000 Indexed Universal Life, it might say you have a cash value balance of say $15,000. Also on that statement it'll say your current death benefit is $515,000.Key terms: DEATH BENEFIT and FACE AMOUNT.

Death benefit is the sum of your Face Amount plus cash values. Face Amount is the insurance you applied for.

Anonymous
#1470947

you're an idiot. you clearly do not know how this product works.

Anonymous
to Anonymous #1535916

So enlighten us on how it works then. Oh wait, you can't.

Anonymous
#1401763

Actually yes they will take the cash value remaining only if you're not smart enough to cash out the remaining amount. If you know death is nearer than farther then, Cash Out.

Anonymous
to Mr.Master42 #1401833

Well it's a life insurance policy..if the purpose is to cash out when you think you will die in a few years I have another product that doesn't cost this much..Thanks a least for letting us know it's a useless product because let's face it IUL's aren't a pension plan and worst it's very very expensive in fees so why would any sane person invest in it?

Anonymous
to Anonymous #1436146

You are correct... kind of...

not really.

You are basically saying if you drink too much water you will die. And if you don't drink any water you'll die... so water is bad.

Both are facts, but the real world application is inbetween.

The challenge is not the policy or cost of insurance, it’s the lack of understanding of how to structure a policy. Which it sounds like is the case in the scenario. If I told you it cost $60,000 to manage a portfolio, you’d say that’s crazy?

However if it’s a $6,000,000 account it’s very realistic to be charged 1% to manage it.

ALL UL POLICIES:

Increasing: The cost of insurance goes up over time and gets ‘expensive.’ FACT.

Level: The cost of insurance stays the same in forfeit of the cash value. FACT. However no one would build a UL the way you are describing.

Just like no who knows anything about nutrition dies from drinking too much or not enough drinking water. Like most things, the truth is in the inbetween. LEVEL: why would it be used if we, “forfeit our cash value?” Simple math… lets say a $500,000 policy COI for a 25yr old is $42mo (using your picture, .0833 @ age 25). By the time we need it, the cost of a $500,000 policy would be almost $5000mo (using your picture, 9.985).

Who can afford that? Not many people. So, why would anyone use UL? Because all of the contributions to this point would be increasing the Cash Value and reducing the amount of insurance needed.

Lets say we put in $144,000 in premiums and the total Cash Value was $489,000 at age 85 (my illustration showed it at 65 @ 6% return, so well assume we put no additional premiums in it for 20 more years and if it averaged less than 1% return until the age 80). We would then be paying premiums on $11,000 in life insurance (using your picture, 9.985)… or $109.835mo. Why? Because we lived a long life and our premiums and interest now are the majority of the policy.

So when we die, we get our Cash Value of $489,000 AND $11,000 of Life Insurance = $500,000. Which we paid $144,000 for. ***For the technical guys, I understand they call the $500,000 the Death Benefit and we don’t get the Cash Value, but this is how it works internally. ***I’d also like to note this policy was not max-funded.

INCREASING: Why would it be used if, “the policy will collapse?” Using your example… $500,000 IUL for a 25yr old might fit if the client: 1. Needs Life Insurance 2. Needs Tax free income 3. Might need access before 59.5 or doesn’t want it past 70.5 4.

Wants anonymity (Think Dr, Lawyer, High profile client) as life insurance is difficult be sued for. It is not asset searchable, unlike a 401k, IRA. 5. Wants to contribute over $5,500yr (IRA max) OR use in combination with IRA 6.

Can do a premium of ~$850mo (in this case, perfect health, no tobacco) What does it look like? (6% return) Age 65 – Premiums: $409,000 ; Cash Value: 1,626,000 Net of fees ; Death Benefit: 2,126,000 (1,626,000 + 500,000 = 2,126,000) That is after COI and Fees. Now, you are correct. If we keep the policy increasing, the Cost of insurance will keep increasing.

We would only do that if we were still planning on contributing. At .5% interest on 1,626,000 is 8,130yr so we are more than covering cost of insurance several times over. However no one would keep it as an increasing policy. Near the end of the premium contribution years, the policy is shifted to a LEVEL premium.

Meaning as we approach 2,000,000 in coverage, we may have $1,800,000 in Cash Value and now our life insurance about is on $200,000 instead of $500,000. Hence costs for insurance stay level. Maybe 10,000 – 15,000yr, even less when we start taking distributions. That may sound like a lot.

However compare that to $2,000,000 in an actively managed account at 1% fees (often up to 2-3%) = 20,000yr. In active money management, assets are subject to loss: if we have a –4% in the market we lose $80,000 and we still pay 1% 19,000+ for it to be managed. If we have a -30% in the market we lose $600,000 and pay $14,000 in fees, net -$614,000. In the IUL, you’d have no loss of principle only the fee of insurance.

Cost is only an issue when it lacks value. I don’t blame you for the misunderstanding, but the information you are spreading is false. Now you know.

If you choose to continue spreading a lie, that’s on your character… not on Transamerica or UL policies. That's why a sane person would 'invest' in one.

Ex-WFGer
to Mack #1436374

Quick question for you "Mack:" At what annual Index Account rate of return do you illustrate Indexed Universal Life (IUL) so-called "permanent" insurance policies for your clients?For IULs such as WFG's flagship policy, Transamerica's FFIUL?6%? 7%?

8%? Higher?Thanks "Mack." Look forward to your answer.

Ex-WFGer
to Mr.Master42 #1401967

"Oh! I'm having a massive heart attack.

Quick, get Transamerica on the phone so I can wait on hold 40 minutes to cash out my FFIUL!"

"Mr.Master42" Kindly GTFOOH. Thank you.

Anonymous
to Ex-WFGer #1401989

I know right... Thank god nobody dies suddenly and have decades of warning so we can maximise a FFIUL?

Anonymous
Glendale, California, United States #1229676

Depends on if the death benefit is Level or Increasing.

William3
to Anonymous Berkeley, California, United States #1229688

Glendale Anon, sorry, but you're wrong. It doesn't matter which option you choose.

The FFIUL policyholder is hosed either way.

If you choose the Level DB option, then you lose the Cash Value per the contract.

If you choose the Increasing DB option, then TA keeps raising your death benefit, keeping your Net Risk, and thus your COI charges, high. These COI charges will skyrocket in your later life, wiping out your FFIUL's Cash Value and busting you out of this policy in your retirement on a fixed income, the time you can least afford for this to happen. You LOSE EVERYTHING after you've dumped $100,000s into this worthless policy.

Do the math. You'll see for yourself.

Anonymous
to William3 #1436143

You are correct... kind of...

not really.

You are basically saying if you drink too much water you will die. And if you don't drink any water you'll die... so water is bad.

Both are facts, but the real world application is inbetween.

The challenge is not the policy or cost of insurance, it’s the lack of understanding of how to structure a policy. Which it sounds like is the case in the scenario. If I told you it cost $60,000 to manage a portfolio, you’d say that’s crazy?

However if it’s a $6,000,000 account it’s very realistic to be charged 1% to manage it.

ALL UL POLICIES:

Increasing: The cost of insurance goes up over time and gets ‘expensive.’ FACT.

Level: The cost of insurance stays the same in forfeit of the cash value. FACT. However no one would build a UL the way you are describing.

Just like no who knows anything about nutrition dies from drinking too much or not enough drinking water. Like most things, the truth is in the inbetween. LEVEL: why would it be used if we, “forfeit our cash value?” Simple math… lets say a $500,000 policy COI for a 25yr old is $42mo (using your picture, .0833 @ age 25). By the time we need it, the cost of a $500,000 policy would be almost $5000mo (using your picture, 9.985).

Who can afford that? Not many people. So, why would anyone use UL? Because all of the contributions to this point would be increasing the Cash Value and reducing the amount of insurance needed.

Lets say we put in $144,000 in premiums and the total Cash Value was $489,000 at age 85 (my illustration showed it at 65 @ 6% return, so well assume we put no additional premiums in it for 20 more years and if it averaged less than 1% return until the age 80). We would then be paying premiums on $11,000 in life insurance (using your picture, 9.985)… or $109.835mo. Why? Because we lived a long life and our premiums and interest now are the majority of the policy.

So when we die, we get our Cash Value of $489,000 AND $11,000 of Life Insurance = $500,000. Which we paid $144,000 for. ***For the technical guys, I understand they call the $500,000 the Death Benefit and we don’t get the Cash Value, but this is how it works internally. ***I’d also like to note this policy was not max-funded.

INCREASING: Why would it be used if, “the policy will collapse?” Using your example… $500,000 IUL for a 25yr old might fit if the client: 1. Needs Life Insurance 2. Needs Tax free income 3. Might need access before 59.5 or doesn’t want it past 70.5 4.

Wants anonymity (Think Dr, Lawyer, High profile client) as life insurance is difficult be sued for. It is not asset searchable, unlike a 401k, IRA. 5. Wants to contribute over $5,500yr (IRA max) OR use in combination with IRA 6.

Can do a premium of ~$850mo (in this case, perfect health, no tobacco) What does it look like? (6% return) Age 65 – Premiums: $409,000 ; Cash Value: 1,626,000 Net of fees ; Death Benefit: 2,126,000 (1,626,000 + 500,000 = 2,126,000) That is after COI and Fees. Now, you are correct. If we keep the policy increasing, the Cost of insurance will keep increasing.

We would only do that if we were still planning on contributing. At .5% interest on 1,626,000 is 8,130yr so we are more than covering cost of insurance several times over. However no one would keep it as an increasing policy. Near the end of the premium contribution years, the policy is shifted to a LEVEL premium.

Meaning as we approach 2,000,000 in coverage, we may have $1,800,000 in Cash Value and now our life insurance about is on $200,000 instead of $500,000. Hence costs for insurance stay level. Maybe 10,000 – 15,000yr, even less when we start taking distributions. That may sound like a lot.

However compare that to $2,000,000 in an actively managed account at 1% fees (often up to 2-3%) = 20,000yr. In active money management, assets are subject to loss: if we have a –4% in the market we lose $40,000 and we still pay 1% 19,000+ for it to be managed. If we have a -30% in the market we lose $600,000 and pay $14,000 in fees, net -$614,000. In the IUL, you’d have no loss of principle only the fee of insurance.

Cost is only an issue when it lacks value. I don’t blame you for the misunderstanding, but the information you are spreading is false.

Now you know. If you choose to continue spreading a lie, that’s on your character… not on Transamerica or UL policies.

Anonymous
to Mack #1436145

Sorry, not sure why this got put here. It was meant to be attached to a different comment.

And I noticed some small math errors...

-4% of 2M would be 80,000 not 40,000. But I think the concept is understandable.

Ex-WFGer
to Mack #1436330

Quick question for you "Mack:" At what annual Index Account rate of return do you illustrate Indexed Universal Life (IUL) so-called "permanent" insurance policies for your clients? For IULs such as WFG's flagship policy, Transamerica's FFIUL?6%?

7%?

8%? Higher?Thanks "Mack." Look forward to your answer.

Anonymous
#1207929

Well if it looks like a money grab and it smells like a money grab...well it's probably a sc*m...Thanks for the interesting read and details and FACTS on WFG and the FFIUL they sell family and friends...

They are stealing your money..plain and simple!

oh but there will be an WFG agent passing around with the lipstick to pretty this pig up while taking your wallet and your families wallet with the other hand!

William3
to john43 Berkeley, California, United States #1207939

Hi John. Yes, the FFIUL is an utterly BOGUS policy.

Through and through.

It amazes me that Lieff Cabraser, Zamansky, etc didn’t start to jump on this whopping fraud until just recently. They’ll have a major $KA-CHING! field day with this slo-mo train wreck.

I’m sure Transamerica and the other for-profit carriers have already budgeted for the massive out-of-court settlement.

At Finance Guy, Ex-WFGer repeated this review from EndMLMAbuseNow. It’s at or near the top of the comments list.

I wonder, will Corona CA WFG agent Bryan Bravo have anything of value to say about these facts and numbers? I'm not holding my breath :-)

William3
to john43 Berkeley, California, United States #1208076

John, sumpin' new for you, heh:

www dat quora dat com / Does-anyone-have-experience-with-Western-Reserve-Foundation-Fixed-Index-Universal-Life-FFIUL-insurance-Is-it-a-good-investment-option-nowadays-for-someone-in-their-mid-20s

This Quora question’s getting up to 3--4k views. When you google “FFIUL” this pops up on the first page of hits.

If you’re not yet on Quora, you can make a super basic FB account to get in.

William3
to john43 Berkeley, California, United States #1210698

Happy weekend John. All quiet here at PC WFG.

The rep-licants got nuthin'. NUTHIN'.

Maybe their brainlets are off somewhere receiving downloads. Massive critical updates to their RahRahSmokenMirror™ OS :-)

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