A couple nearly 70 years old and in good health asked a newspaper financial columnist if it was too good to be true that a $200,000 life insurance policy could provide an $800,000 tax free benefit for their children.
Well, $800,000 sounds like a bit of a stretch, especially if you want to play it safe with a guaranteed policy. Hovever, the general concept is valid.
They are talking here about a survivorship universal life policy, called a SUL or second-to-die. And they’re probably talking about the $200,000 as a single pay, one single lump sum payment with no further premiums. The columnist gave a fairly good answer, and warned about guaranteed and non guaranteed elements. Well, that’s a traditional SUL, and to get anywhere near $800k with a $200k single pay, you’d have to look at a SUL.
There is also Guaranteed SUL, of G-SUL. The benefit won’t be as high, but it’s guaranteed to age 120, so you don’t have to worry about the policy’s performance or outliving your policy.
Here’s what a Guaranteed SUL looks life for someone in “good” health. Two rate classes, preferred and Non-Smoker Plus, with Prudential are health rates that mean good. Prudential is generally the strongest carrier right now for G-SUL, but you would have to compare rate given the couple’s health factors.
| Single Premium | Age | Face Amount both Preferred health rate |
Face Amount both Non-Smoker Plus health rate |
Carrier | Product: PruLife SUL Protector (2011) |
| $200,000 | age 69 | $775,890 | $663,037 | Prudential | guaranteed to age 120 |
| $200,000 | age 70 | $732,222 | $626,136 | Prudential | guaranteed to age 120 |
To boost the benefit amount higher you could consider a traditional SUL. There are many options. John Hancock has a new plan that pushes the guarantee past 90. You would have more flexibility for funding, and could push the benefit higher, if you are willing to take the risk and have someone monitor it for you.
If a financial advisor does propose something a survivorship UL, make sure you get quotes from an independent life insurance agent like myself. There are a lot out SUL plans out there, and your financial advisor might not be aware all the best alternatives.