If you have clients with existing life insurance that no longer fits their needs or you’re trying to capture assets at the bank that your client has earmarked for legacy but wants to keep liquid “just in case”, take a look at single-premium universal life with a guaranteed return of premium.*
The Ideal Client Profile
Ages: 60-80 (85 in some states)
Policy Minimum/Maximums: $15,000-$250,000+
- Existing life policies where cash values are decreasing
- Existing life policies where the client no longer wants to make premium payments
- Assets currently held at a bank, likely for beneficiaries
General Product Specifications
Underwriting: Simplified. Often Immediate Issue. You can see a few samples of health questions HERE.
Riders: Guaranteed return of premium. Other riders such as chronic illness or terminal illness vary by state and carrier.
Commissions: Up to 11%. Commissions depend on the state of issue, product, client’s age, and for some carriers, tobacco usage.
Jan, age 65, has $100,000 at her local bank that she is planning on leaving to her grandchildren. She is reluctant to tie the money up in a fixed annuity, especially with where rates are today. She also wants access to the money “just in case”.
You know that Jan has more than enough assets and will never need to touch that money. After all, you’ve done a great job planning for her retirement, long term care needs, and anything else that may occur.
This is the ideal client for a single premium UL policy. Here’s how it works:
- Jan moves 50k from the bank (keeping 50k in her account) to a single premium universal life policy.
- Her 50k is immediately worth $114,000 for her grandkids should she pass away.
- Even without any cash value growth, her death benefit can’t drop below $91,912 (assuming no loans, surrenders, or withdrawals)
- If she changes her mind at any time, she can get her 50k back.
- Jan’s money has growth possibilities, even though that is not a primary objective.
- Jan’s “safe money” bank investment would need to return at least 4.12% (assuming a 25% tax rate) in order to surpass the death benefit before she turns 85.
If you’re interested in digging into a few details, here are a few SAMPLE ILLUSTRATIONS.
Finding alternatives to unique situations is our specialty.
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*There are several products in this space. All have different features and benefits. No one product is specifically referenced in this post and the specifics detailed herein may not match the examples used exactly.