Cash Value - Life Insurance Recommendations

Cash value in Guaranteed Universal Life

March 6, 2012

4:37 PM

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Banner Life, Cash Value, guaranteed universal life, MetLife, No Lapse Guaranteed Universal Life

To follow up on a post last week comparing non guaranteed interest rates for seventeen major life insurance carriers, Met Life 5.45% was the highest and Banner the lowest at 3.00%. But non guaranteed rates are a secondary consideration with Guaranteed Universal Life products, as these were.

For example, compare MetLife’s “Guarantee Advantage Universal Life” with Banner’s “Life Choice UL”: $250,000 Face amount, age 63, female, preferred non tobacco rate, lifetime guarantee no lapse.

Annual Premium	Carriier	Guaranteed Interest Rate	Current Non Guaranteed Interest Rate	Guaranteed Cash Value Year 20	Non guaranteed Cash Value Year 20

$3,724.44	Banner	3.00%	3.00%	$20,854	$20,854
$4,568.02	MetLife	3.00%	5.45%	0	0

With a Guarantee UL, also called no lapse guranteed UL, the lowest premium is the most important factor, locking in lifetime coverage fixed premium. Cash value is usually not a factor at all, but can come into play in a few important ways.

1. Cash value acts as a safety net if premium are not paid on time to prevent the policy from lapsing. That’s the biggest risk and challenge of a no lapse UL. Can the policy owner make timely payments for 10, 20 years or longer? That’s a detail that can be missed when juggling accounts or switching banks. The bank draft should be set up to be fool proof. If a mistake is made, missing two or more payments, cash value can rescue the error.

2. Drawing down cash value instead of premiums if the policy holder is in failing health or terminally ill. On a level face amount policy, whatever cash value becomes irrelevant when the policy holder passes away. The policy will only pay out the face amount. It’s use it or lose it with cash value. Proper management of cash value in any universal life policy can save the policy owner thousands in premiums.

Banner’s guaranteed UL builds guaranteed cash value making it one of the top guaranteed ULs on the market. Banner also has very competitive premiums. Metlife’s non guaranteed 5.45% projects $12,860 cash value in year 10, but declines steadily thereafter as age related cost of insurance rises. Metlife’s premium is much higher for the same coverage, with the non guaranteed rate only a marginal factor in the early years of coverage, Banner has by far better plan.

Quotes run on 3/6/2012 to the best of my knowledge and are subject to change, as are non guaranteed rates.

Carriers and Products:
MetLife Investors U.S.A. Insurance Company: “Guarantee Advantage Universal Life”
Banner Life Insurance Company: “Life Choice UL”

Using an Indexed Universal Life (IUL) as a college savings plan: example of how it works

by Sean Drummey

January 17, 2012

5:00 PM

2 Comments on Using an Indexed Universal Life (IUL) as a college savings plan: example of how it works

In your 40's, Increasing death benefit for cash accumulation, maximizing cash value, MEC limit, tax-free loans

Using Indexed Universal Life (IUL) for college savings uses the same cash accumulation strategy as Indexed ULs for tax-free retirement income. Cash value grows tax deferred and is distributed as tax free loans. The IRS limits the amount of premium that can be put into a contract and keep the distributions taxed advantaged, rules for Modified Endowment Contract (MEC), so the goal is to put in the maximum premium allowed below that limit. In life insurance terminology, the guideline level premium determines the policy face amount. The death benefit is structured as increasing during the accumulation phase and level during the distribution phase.

Granted other options are available, but with an indexed UL, there’s downside risk protection with at least a 0% floor to index crediting, Lincoln has 1%. Also there’s a death benefit in the ultimate worst case scenario for the parent.

The starting point for the prospective policyholder is to determine how much premium and for how long? The countdown clock for college savings is simple: 18 years.

Male age 42, best health rate, $10,000 premium per year for 18 years. Amounts assume a 8.45% index interest rate, S & P 500 annual point-to-point index.

Carrier	Initial Death Benefit	Cash Value Year 18	Death Benefit Year 18	Distribution Years 19-22	Cash Value Year 23	Death Benefit year 23
						.
Lincoln	$225,000	$348,527	$574,527	$102,444	$67,157	$181,703

What if the market doesn’t preform that well? Be sure to review multiple index return scenarios. They are easily illustrated. Here are 5% index return projections.

Carrier	Initial Death Benefit	Cash Value Year 18	Death Benefit Year 18	Distribution Years 19-22	Cash Value Year 23	Death Benefit year 23
						.
Lincoln	$225,000	$246,646	$471,646	$59,658	$46,689	$207,551

Looking at a 10 year time span for $10,000 in premium instead of 18, the results didn’t work out very well: $37,021 in distributions assuming 8.45%. As in most savings plans, the earlier the start, the better.

Lincoln National Life Insurance Company: “Lincoln LifeReserve Indexed UL (2011)
Quote run 1/17/2012. Rates subject to change.

Sean Drummey
Phone: (910) 328-0447
email: spdrummey@gmail.com

Indexed Universal Life (IUL): less blue sky projections

by Sean Drummey

January 12, 2012

5:12 AM

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0% Floor, 1 year point-to-point, Cash accumulation, Dow Jones Industrial Average, early cash value accumulation, Equity Indexed Universal Life Insurance, Guaranteed Floor, Income distribution, Increasing death benefit for cash accumulation, Index universal life, Indexed Universal Life, interest crediting, Lincoln life insurance, Lincoln National Life Insurance Company, Maximum cash accumulation Indexed UL, over-funding, rapid cash value accumulation, S&P 500, tax-free loans

Indexed Universal Life (IUL) illustrations commonly show 7% to 8+% returns based on historical averages over the last 20 to 30 years. Whether or not an Indexed UL can capture that kind of performance over the coming decades is debatable. 2008 bore an unsettling resemblance to 1929, except officials were able to spread foam on the runway. The Euro’s instability lead to an additional dose of foam for European banks late last year. All this uncertainty can make Indexed ULs more attractive because guarantees eliminate downside market risk while providing a life insurance benefit. But what about the upside Certainly 2011’s index results surveyed were below average. Tops was the Dow Jones Industrial Average at 5.53%. The S & P 500, the most widely used index, came in at 0%, which is the floor for an Indexed UL regardless. But then again, seeing blue sky, 2012 is off to a good start, and historically that’s a very good sign.

When reviewing an Indexed UL, it’s prudent to scenario the possibility of lower returns. I ran a series of comparisons last fall on overfunding an Indexed UL to build cash value for retirement income. Lincoln performed very well compared to the competition. I used the S & P 500 Index, annual point-to-point, and Lincoln assumed on the illustration an 8.45% average return.

Over 8%? How about 5%?
What would returns look like projecting at a more pedestrian 5%? Assume a male, age 44, excellent health, putting in $25,000 a year in premiums for 20 years with the goal tax-free distributions for retirement income at age 65. Initial death benefit $520,000.

Carrier	S&P 500 Index Return	Cash Value Year 20, Age 64	Death Benefit Year 20, Age 64	Retirement Income Yrs. 21-40 Ages 65-84	Cash Value Year 41, Age 85	Death Benefit year 41, Age 85
						‘
Lincoln	8.45%	$1,077,926	$1,597,926	$146,326	$830,516	$1,120,514
						‘
	5.00%	$727,834	$1,247,834	$51,396	$219,059	$317,285

Take a different example with less premium. $10,000 premium a year for 20 years: male, age 47, excellent health. Initial death benefit $185,000.

Carrier	S&P 500 Index Return	Cash Value Year 20, Age 67	Death Benefit Year 20, Age 67	Retirement Income Yrs. 21-40, Ages 68-87	Cash Value Year 41 Age 88	Death Benefit year 41, Age 88
						.
Lincoln	8.45%	$424,913	$609,913	$46,590	$186,833	$252,943
						.
	5.00%	$287,005	$472,005	$19,732	$62,067	$77,698

When shopping for an Indexed Universal Life
All Indexed UL proposals come with full illustrations. They’re required. Brochures are okay as a start, but zero in on the illustration’s chart. An agent can easily generate and email them on .pdf format. Illustrations are based on current assumptions, for example 8.45% for Lincoln, but can be run with interest rate assumptions anywhere from 0% up to current. Make sure to request and review lower interest rate assumptions as a counterpoint.

Carrier: Lincoln National Life Insurance Company; Product: ” Lincoln LifeReserve Indexed UL (2011)”
Quotes run 1/11/2012 and are subject to change.

For your own personalized free quote please contact me.

Sean Drummey
Phone: (910) 328-04447
email: spdrummey@gmail.com

Participation rates IUL: set sail for cash value

by Sean Drummey

December 14, 2011

5:19 AM

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Cap, Cap Rate, Cash accumulation, Cash Value, cash value life insurance, cost of insurance, Indexed Universal Life, Participation Rate

This analogy is fairly close. Indexed Universal Life (IUL) is like a yacht. To maximize cash value during market gains, sails are set during favorable conditions. The mast acts like the cap. Right now the highest cap rates are running about 14%. So that is like a 14 foot mast. The participation rate, or par, acts like a sail, ideally like a spinnaker, to maximize cash value. Most of the carriers offer a 100% par rate. Many guarantee a 100% par. But that doesn’t mean the carrier can’t still control crediting cash value in too favorable market conditions. If the market index went ahead the carrier’s ability to credit, the cap rate would be lowered. It is like in favorable winds, no matter how large the sail, if the mast is only 8 feet tall, you’re not going to catch as much of those winds.

The overall elements of an Indexed Universal Life: cap, par, fixed account, indexed accounts, cost of insurance, the carrier, needs careful review before selecting the best product. Just as a yacht, one needs to examine the craft overall: masts, sails, engine, weight, center board and design.

Surrender Charges on IUL

by Sean Drummey

November 28, 2011

4:57 PM

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Cash accumulation, Cash Value, Equity Indexed Universal Life Insurance, Estate Planning, In your 40's, In your 50's, Indexed Universal Life, Lincoln National Life Insurance Company, Modified Endowment Contract, Penn Mutual, Retirement income

It’s always good to know the rules for getting money back, so I compared surrender charges for indexed universal life (IUL) carriers. Surrender charges decrease on a declining schedule. For the carriers I compared, it takes between 10 to 20 years for those charges to completely go away. Not surprisingly, Lincoln and Penn Mutual were among those most favorable.

Penn Mutual is the best: no surrender charges after the 9th year, also no surrender charges in excess of target premium.

Target premium is a premium designed maintain a permanent policy for life. Mind you target is a guidepost for keeping the policy in force, how the policy performs may require more or less premium. With Indexed Universal Life one strategy is to over fund the policy above target to build additional cash value. Of the carriers I surveyed, only Penn Mutual and Old Mutual did not require a surrender charge on that portion of the premium.

For example, as in prior comparisons: male age 44, over funding an Indexed UL with $25,000 in premium for 20 years in order to generate tax free retirment income in the form of policy loans. With Penn Mutual this is a $590,000 increasing face amount policy, and the given target premium is $7,918 a year, but by over funding it with $25,000 in premium, just under the IRS limit for a Modified Endowment Contract (MEC), the policy builds the maximum permissible tax free cash value. That amount between $7,918 and $25,000 would not be subject to surrender charges at any time with Penn Mutual.

The least amount of surrender charges in the shortest period of time is a distinct advantage for an Indexed Universal Life in case there is a change in plans.

Sean Drummey
Contact for a free quote
Phone: (910) 328-0447
Email: spdrummey@gmail.com

Best Indexed Universal Life (IUL) for retirement income: How does AXA Equitable measure up?

by Sean Drummey

November 22, 2011

4:29 PM

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Cash accumulation, Cash Value, Guideline level premium, In Your 20's or 30's, In your 40's, Increasing death benefit, Increasing death benefit for cash accumulation, Indexed Universal Life, Internal rate of return, IUL, Maximum cash accumulation Indexed UL, Maximum cash accumulation IUL, policy illustration, Transamerica Life Insurance Company

Which is the best Indexed Universal Life (IUL) carrier for tax-free policy loans for retirement income? AXA Equitable has been in 2011 a consistently leading seller for Indexed UL. Let’s compare AXA side-by-side with other carriers to see how it performs. AXA product features include four index options. But beyond reviewing specs like rate caps and guarantees, the most useful way to evaluate carriers is to run policy illustrations using the the same premium and death benefit and compare projected returns.

The Indexed UL structure employed here is to overfund premiums with the minimum amount of death benefit to stay within IRS rules for tax advantaged life insurance. Then in retirement income take the maximum amount of tax free loans while still retaining a lifetime death benefit.

This Indexed UL strategy is an alternative for someone in their 30’s, 40’s and 50’s to directly investing in equity markets for retirement. IULs allow you to take advantage of market gains without the downside risk.

Here’s what it looks like for a male age 44 putting in $25,000 a year for 20 years, and then starting at age 65 taking the maximum out in tax free policy loans for retirement income for the next 20 years, while retaining at least a $100,000 death benefit to age 121. The death benefit starts at about $540,000 for each carrier and increases for years 1 – 20.

Carrier	Cash Value Year 20	Death Benefit Year 20	Loan Amount Years 21-40	Cash Value Year 41	Death Benefit Year 41
Lincoln	1,072,791	1,611,714	145,602	826,476	1,115,403
North American	1,144,104	1,683,029	147,248	658,775	981,056
Minnesota Life	1,100,898	1,655,898	137,217	584,737	876,987
John Hancock	1,085,171	1,323,908	139,719	614,556	913,093
Transamerica	1,065,637	1,630,637	95,000	215,254	346,582
AXA Equitable	995,284	1,534,207	86,402	98,473	212,604
Aviva	972,524	1,527,524	120,188 * *yrs. 21-31 only	83,677	204,366

I quoted AXA Equitable’s S & P 500 current rate which assumes 7.55% which is below the 8% plus range of S & P 500 rates assumed by other carriers, and that does have something to do with its lower cash value and death benefit accumulations on the chart at year 20.

Regardless, AXA only uses a variable loan rate which is currently illustrated at 3% policy yeas 1-10 and 2% thereafter. The rate is the greater of 3% or published monthly average Moody’s Corporate Bond Yield. Guaranteed not to exceed 15%. They do not offer a fixed rate.

Since those loan payouts are not competitive with Lincoln’s 5% fixed rate or higher variable rates assumed by the other carriers, AXA Equitable does not appear be competitive. Best way to find out which carrier is right for you is to request that I email you free quotes in the form of policy illustrations.

Carriers & Products quoted:

Lincoln National Life Insurance Company: “Lincoln LifeReserve Indexed UL (2011)”
North American Company for Life and Health Insurance: “Rapid Builder IUL”
Minnesota Life Insurance Company: “Eclipse Indexed Life”
John Hancock Life Insurance Company: “Indexed UL”
Transamerica Life Insurance Company: “Freedom Global IUL II”
Aviva Life and Annuity Company: “Advantage Builder Series IV”
AXA Equitable Life Insurance Company: “Athena Indexed Universal Life”

call Sean (910) 328-0447
email: spdrummey@gmail.com

Disclaimer: Information and quotes are current and accurate to the best of my knowledge on November 22, 2011. Product features and rates are subject to change. Quotes are non-guaranteed projections based on current interest rates and cost of insurance. Tax information is general information only. Please seek professional tax advice for personal income tax questions and assistance.

Indexed Universal Life (IUL) compared to a ship’s journey

by Sean Drummey

November 17, 2011

10:38 AM

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California, Cash Value, Equity Indexed Universal Life Insurance, Estate Planning, Indexed Universal Life, Internal rate of return, IUL, Modified Endowment Contract, policy illustration, Variable Life Insurance, variable universal life, VUL

Think of IUL as a means to achieve desired goals: to build cash value and to provide a death benefit. It is like going by yacht across the Pacific from California to Tahiti. This is a long journey, under many weather conditions, and this vessel is particularly designed to be safe and to reach its destination.

Prior to this life insurance that captured stock market, equity, returns was a more perilous journey. Variable Universal Life, a VUL class yacht, was favored. It is a sleek craft with the potential of performing very well (direct stock market participation), but like a yacht without an engine, it has proved to be risky for loss of cargo (cash value) and to capsize and sink (lapse).

So along came Indexed Universal Life as a safer alternative. It is like a powered yacht. Call it a IUL class yacht. She is backed by the ship builder (carrier) with no direct participation in the stock market. She has a sail or multiple sails (Index Account). Sails are designed for use when the winds are favorable (bull market) to build up the cargo (cash value) and ship’s value (death benefit). If there is a typhoon (bear market) approaching, the ship’s owner can use the engine instead (Fixed Account). If there are varying winds or doldrums, the owner may use both sail and engine (Participation Rate). The owner must decide in advance which mode to use for a period of time (Segment). This segment is generally one year. When the segment is over, the yacht owner is awarded for its performance (Interest Rate Crediting ) that increases the value of the cargo (cash value) and yacht (death benefit).

Now this IUL yacht has a very sturdy deck (Floor). Generally this deck is totally protected against leakage (0% market losses). It may even a raised deck (1% or higher Floor). As with a double hull, there are also guarantees in place for the ship not to sink (lapse). These guarantees may be for a set period of time like 10 years, 20 years or for life.

There are, however, certain restrictions placed on the ship’s speed in favorable conditions. The height of the mast is limited by the ship builder (Cap) or the top mast lowered (Spread). The yacht owner may gain extra by increasing the volume of sail (additional premiums). There are however certain rules as to how much sail is permitted (IRS rules for Modified Endowment Contract or MEC).

With an Indexed Universal Life cash value is built higher by increased premium contributions, and by gauging the direction stock market performance. Ideally, when the market is in an upward trend, the owner has directed premium into a high performing index, and when the market is in a downward trend, premium is directed into a fixed account. Regardless of choice or performance, the policy is protected against any losses by the floor. It is similar to a powered yacht that sets the maximum amount of sail with favorable winds, and uses the engine when conditions are unfavorable. There are various possible coverage goals. Some may use an IUL for early cash value accumulation for retirement, others can use the cash value for premium payments in retirement and estate planning.

Keep in mind when reviewing Indexed UL products
Just as yacht makers may brag about the boat’s sails, engine and design, life insurance carriers will promote their Cap (e.g. 13%), Fixed Account guarantee (e.g. 3%), Floor guarantee (e.g. 1%) and other bonus features. What is not evident is the product’s cost of insurance, expense and policy charges, the ship’s drag, how that affects the performance over a long period of time, especially 20, 30 or 40 years out.

How to Evaluate Competing Indexed UL Products
Fortunately, you don’t have to buy this IUL yacht after just reading the specs and trusting that it sails well. Request from the agent a policy illustration to test the product’s projected future performance. This will simulate how load and expense charges affect policy values, and compare that side-by-side with other carriers. This will help determine the all important internal rate of return. It’s similar to computer modeling a yacht race factoring each boat’s design, tonnage and various wind conditions. The carrier’s financial strength and viability is another important consideration because cost of insurance and other expense charges are subject to change, and you are also selecting which carrier will perform best and deliver the best results over time.

Sean Drummey
Contact for a free quote
Phone: (910) 328-0447
Email: spdrummey@gmail.com

Continue reading “Indexed Universal Life (IUL) compared to a ship’s journey” →

Indexed Universal Life (IUL) comparisons for cash accumulation and retirement income

by Sean Drummey

November 10, 2011

4:38 PM

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Age 65, Cash Value, Equity Indexed Universal Life Insurance, Indexed Universal Life, Internal rate of return, policy illustration, policy loan, Retirement income

Here’s a side-by-side comparison of two Indexed Universal life (IUL) products with a focus on cash value accumulation and retirement income. This post compares Lincoln National‘s “Lincoln LifeReserve Index UL (2011)” to North American‘s “Rapid Builder IUL”. North American in my prior comparison outperformed Minnesota Life and John Hancock’s IUL products.

I will not give here a detailed look and the product features of each IUL, as for example, Lincoln’s cap on its 1 Year Point-to-Point is currently 13%. I will focus on the projects results of where affected by their internal rate of return, how the fees and expense charges affect the policy, assuming as much as possible apples-for-apples comparison: same death initial premium and death benefit. North American assumes a 8.30% return on its S & P 500 point-to-point; Lincoln assumes 8.45%, so these policies run fairly close in their assumptions. For an agent or a prospective buyer, reviewing full illustrations to see how this internal rate of return affects the policy in 20, 30 and 40 years, and by comparing values side-by-side with competing carriers is a very useful analytical tool.

Here are the assumptions:

44 year old male, best health rate, puts in $25,000 a year premiums for 20 years, then no further premium contributions. Structure minimum death benefit, here a starting face amount of $538,923, and still qualifying at tax advantaged life insurance under IRS rules for a modified endowment contact (MEC). In the next 20 years draws out the maximum in loans, which are not subject to taxation, for retirement income, and still target a $100,000 death benefit at age 120 or over. The index is S & P 500 annual point-to-point.

Each quote comes with a full illustration that charts a lifetime of policy values year by year. Here are some benchmarks for comparison:

Age 64 (year 20): cash value accumulation
Age 65 to age 84 (years 21-40) retirement funds, i.e. policy loans
Age 85 (year 41) death benefit amount

Carrier	Cash Value Year 20	Death Benefit Year 20	Loan amount Years 21 – 40	Cash Value Year 41	Death Benefit Year 41
Lincoln	1,072,791	1,611,714	145,602	826,476	1,115,403
North American	1,144,104	1,683,042	147,248	658,775	981,056

What became noteworthy and crucial in the comparison were the loan rates and rules of each plan. North American offers a choice of loans at a fixed or variable rate. The variable rate is based upon Moody’s monthly bond average yield , which for October, 2011 was 4.60%. North American, presumably because the current rate is historically low, assumes by default a 5.60% rate for quotes, which I also used here. This run down will give you a look how the rate has changed over the last century. North American’s rate has a 4.00% floor and a 10.00% cap on their variable loan rate.

Lincoln had only one option a guaranteed fixed rate: 6% for policy years 1 – 10, and 5% for years 11 to age 100. What was noteworthy is how strongly the fixed rate returns performed against the variable rate. Other carriers including North American offer a fixed rate loan option but the loan payout numbers are not nearly as good as Lincoln’s. (Also interesting to note Lincoln had an option for the loans/withdrawals to be monthly, quarterly, semi-annual or annual, and the loans values were higher selecting the monthly option.)

For cash value accumulation strategy and to use policy loans for retirement income, the parameters of this comparison, Lincoln has a more favorable IUL product than North American. It would generally be much preferable to lock in a well performing fixed rate over the span of decades than be subject to downside risks of fluctuating rates.

For example, compare Lincoln fixed loan rate to North American with changes to the loan rate:

$145,602 5.00% fixed rate Lincoln

$147,248 5.60% variable rate North American
$130,920 6.60%
$124,853 7.00%
$110,775 8.00%
$92,123 9.00%
$70,351 10.00% maximum

$107,777 fixed rate Standard Policy Loan option North American

As you can see, North American variable loan rate would have to consistently stay at or below 5.60% in order to outperform Lincoln. That’s unlikely.

Carriers & Products:

Lincoln National Life Insurance Company: “Lincoln LifeReserve Indexed UL (2011)”
North American Company for Life and Health Insurance: “Rapid Builder IUL”

Image source: Wikipedia Commons

Disclaimer: Quotes were revised on 11/22/2011, and are correct and accurate to the best of my knowledge. Product features and rates are subject to change. Please contact the carriers directly for full details on these products reviewed. Tax information is general information only. Please seek professional tax advice for personal income tax questions and assistance.

Universal Life vs guaranteed UL what works best depends on age

by Sean Drummey

October 12, 2011

2:53 PM

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Age 68, Cash Value, Estate Planning, guaranteed universal life, In your 40's, In your 50's, In your 60's, In your 70's, In your 80's, Universal Life

Universal Life, UL, has many different life insurance product designations. One of the most basic distinctions is whether it is a UL or a Guaranteed UL.

Guaranteed Universal Life (Guaranteed UL)
With guaranteed UL there is a lapse protection guarantee: as long as you pay your premium on time, coverage is guaranteed. Lifetime guaranteed UL is guaranteed to age 121. Great coverage: inexpensive, straightforward, easy to understand. Put premium payments on bank draft and forget about it. Is there a catch? No. Well, perhaps in a few ways: guaranteed UL’s lack flexibility on the adjusting the premium amount, the lapse protection is lost if the premium is not paid on time, and guaranteed UL’s do not build much cash value.

Universal Life (UL)
UL’s are called flexible adjustable life insurance for a reason. Premiums are flexible. There is a target premium. The real target is to make the life insurance coverage last for the rest of the policy holder’s life. Premium can be raised, lowered or kept the same to meet that target. It’s sort of like gas in the car. The idea is to have enough gas (cash value) to reach one’s destination, i.e. go beyond the person’s lifespan. At the policy’s beginning, target premium is typically set to age 100. The car’s (i.e. carrier) performance helps determine how much gas (premium) is needed. With a UL the holder is obliged to take a much more active role in management of the policy.

Does my age affect which type I choose?
Yes, generally select a UL in 40’s and 50’s, and a guaranteed UL in 60’s, 70’s and 80’s

Universal Life: 40’s and 50’s
When younger, in your 40’s or 50’s, you want the flexibility of regular universal life to lower or raise premium payments depending on your financial situation, to build higher cash value and to possibly replace your coverage for a better product later on.

For example:

Mrs. Wright, age 46, takes out a $250,000 universal life policy with the target premium of $150 a month. Five years later, her child needs braces and her monthly budget is tight. Since there is $3,000 cash value in her policy, Mrs. Wright, after reviewing an in force illustration, lowers her premium to $100 a month. One year later after getting back on better financial footing, Mrs. Wright increases her premium to $200 a month until the policy back on track to the original target of age 100. Later she is able to lower the premium back down to $150 a month.

Guaranteed UL: 60’s, 70’s and 80’s

When older, lock in a benefit amount for a set premium for life.

For example:

Mr. Ward, age 68, would like to leave $500,000 to his son. He chooses a guaranteed universal life product because the premiums are fixed and the policy is guaranteed to age 121. He has a secure retirement income and can well afford a fixed premium payment. He puts those payments on bank draft and can rest assured that this portion of his estate plan is secure.

Life Settlement: seniors watch out

by Sean Drummey

September 29, 2011

2:51 PM

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Accelerated Benefit, Accelerated Benefits, Accelerated Death Benefits, Cash Value, life settlement, Life Settlements, Living Benefits, Policy Review, Seniors, Stranger Owned Life Insurance, Term Life Insurance

I wrote in this blog about stranger-originated life insurance this Monday, and the next day Imperial Holdings, Inc., a company in the life insurance settlement business, had its headquarters in Boca Raton, Florida raided by the FBI. No charges have been filed. Life Partners, Inc., is another company in the settlement business, is also under investigation. Allegations for Life Partners focus on misrepresentations to their investors.

Regardless, seniors interested in a life settlement need to be wary of the life settlement industry. Finra investors provides an excellent overview of the issues involved.

Make sure to contact an independent agent to review all your options before signing over ownership of your policy. Ask your company for an in force illustration. Explore options such as: Continue reading “Life Settlement: seniors watch out” →