Group Universal Life

[flatrock]

I have the option of getting Group Universal Life through work $298,000 coverage for $48/mo.. There is also a minimum required $10 per month contribution to the cash fund so total cost is $58 per month. I can also get term from work but for my age it is only slightly cheaper. The cash fund for 2008 pays 4.75% interest. As long as I dont exceed $30,000 of cash contribution while I own the policy the cash contributions, earnings, and all but two months premiums are available for withdrawl at anytime with no taxes due. The premiums vary in price every 5 years and at age 60 get quite expensive. I got a quote for 300K from a major carrier and they wanted $409 per month for my current age of 47. Premium will not change for life and a guarnteed min. cash value projection available for withdrawl at age 65 of $80,000. Heirs get 300K for certain when I die.
Obviously there's a great deal of difference between $409 & $58 per month.
Does anyone else have experience with Group Universal Life from their employer? Im trying to determine if Im getting a great rate and if there is any value at all to contributing beyon the min. to the cash fund or just stick with term which is only slightly cheaper as offered thru work.

[tmango]

one concern with optional insurance through work, is what happens if you leave/change jobs.

Just something to think about. ( I dont have any experience with this, just thought I might add)

[maat55]

Term insurance is much cheaper and you keep every penny of your investment dollars.

Go price term for 20 year.

[jIM_Ohio]

How much coverage do you need now?
Is the policy portable (can you keep it when you leave job)? If so, what will it cost then?
At what point will interest pay the premiums?

Early on whole life/universal life appears expensive. If you accumulate enough cash to pay the premiums, the deal becomes much better than term or other options.

[Like2Plan]

Originally Posted by flatrock

I have the option of getting Group Universal Life through work $298,000 coverage for $48/mo.. There is also a minimum required $10 per month contribution to the cash fund so total cost is $58 per month. I can also get term from work but for my age it is only slightly cheaper. The cash fund for 2008 pays 4.75% interest. As long as I dont exceed $30,000 of cash contribution while I own the policy the cash contributions, earnings, and all but two months premiums are available for withdrawl at anytime with no taxes due. The premiums vary in price every 5 years and at age 60 get quite expensive. I got a quote for 300K from a major carrier and they wanted $409 per month for my current age of 47. Premium will not change for life and a guarnteed min. cash value projection available for withdraw at age 65 of $80,000. Heirs get 300K for certain when I die.
Obviously there's a great deal of difference between $409 & $58 per month.
Does anyone else have experience with Group Universal Life from their employer? I'm trying to determine if I'm getting a great rate and if there is any value at all to contributing beyond the min. to the cash fund or just stick with term which is only slightly cheaper as offered thru work.

What happens to the cash value of the policy if you elect to leave before reaching age 65? Will you have any portable coverage?

If you pay $409/month, your yearly premium would be $4908. If you pay the premiums up to age 65 (another 18 years), you will have paid out $88344.

That just seems wicked high to me. You should at least price out term-- you can get 20 year and 30 year level term coverage in which the premium does not change. It would take you up to age 67 or 77. CW is generally to buy term and invest the difference. Hopefully, your investments (as they grow over time) should replace the need for some of your insurance as time goes by.

[flatrock]

Thanks for the quick respsones. To answer some of the questions. The cash value including all contributed cash and all premiums except 2 months of premiums is available and can be withdrawn at any time with no penalties or surrender fees. The interest rate is set each year currently 4.75% and guaranteed not to ever be less than 4%. The interest is paid on both premiums and cash contributions. With my combined federal & state tax burden I would have to earn 5.2% taxable to yield 4%. The insurance is portable sort of. If I quit or retire the rates are then 25 percent higher than the group rate. At age 60 thru 94 they also begin discounting the coverage. At age 74 the premiums freeze. This was one major difference between the individual policy where the premium was constant from day 1. Of course I have no intention of paying $400 plus per mo for life insurance. The group universal plan at work does intrigue me somewhat in that almost all of the premiums and 100% of the contributed cash & earnings can be withdrawn tax free so long as the 30K lifetime contribution limit is not exceeded. My sense is that Im paying as I go for coverage (kind of a month to month term) and I can get return of premium. Not an investment by any means but if I go for the employer group term I do not get return of premium. I have priced level term outside but for my age (47) the rates start to go up and I could not find any cheaper than the group term. The group universal life only requires $10 a month extra to the cash fund to get all but 2 months of premium payments returned. Ive got at least 10 more years (hopefully) so on the surface I havent yet found anything thats a major deal breaker. I may price a ROP (return of premium) term policy with a major carrier and see how that compares. Thanks again for all the input. Sorry its a long post I tend to obsess over things I dont completely understand which involve my money.