Funding Retirement with Blended Policy

[detdent]

Hey guys,

I own a blended WL policy with PUA rider and am looking for help understanding how the policy can fund retirement. Say the policy has 2mil in cash value and 4 mil death benefit at 65 how can I use this to extract say 100k a year to live off for 20 years or so. It seems like with loan interest and premiums needing to get paid yearly that the policy hits critical mass down the road and fails? Am I not seeing something right?? Thanks for your responses.

 

[LGilmore]

Who is the policy with? That actually helps to know the carrier.

How much of the policy is term?

The answer will depend on whom you're with and what type of whole life you purchased.

 

[detdent]

Guardian PU99 policy with about 1.5 mil WL and 500k term (with PUA rider)

 

[LGilmore]

"Guardian PU99 policy with about 1.5 mil WL and 500k term (with PUA rider) "

Ok, very good company. Consider dropping the term rider as the cash values and whole life death benefit grows (PUA buy paid up death benefits)

"Say the policy has 2mil in cash value and 4 mil death benefit at 65 how can I use this to extract say 100k a year to live off for 20 years or so. It seems like with loan interest and premiums needing to get paid yearly that the policy hits critical mass down the road and fails? Am I not seeing something right?? Thanks for your responses"

Now I am not the agent and don't know exactly how he set this up so I will try to explain in general terms that might apply....

When you hit 65 you can take in a combination of dividend surrenders and loans the 100k without tax consequences. Dividend surrenders will come from that PUA part of your policy and policy loans directly from the cash values. Now in what proportion you would take of each of these would simply be doing the math and seeing which gives you the best bang for the effort. 50/50? 75/25? 100/0? or 0/100? don't know till you pencil it out. The nice thing is you have the Flexibility to do that and even make a different election every year.

When you make this move the surrender of PUAs has no interest issues. None. You are correct about loans and loan interest. What you may do is switch your future dividend elections to reduce any interest on the loans and pay down the loan balance. Usually, the interest due and dividend paid wipe each other out so the plan slowly either creeps downward in loan debt or slowly rises.

Again, didn't write this business, don't know what bells and whistles may be installed. As far as dying with a loan balance, it is subtracted from the death benefit.

Don't know your agent, but do know the company. I have written guardian for my kids, when I could write just about anybody. They are a good choice.

 

[detdent]

"Guardian PU99 policy with about 1.5 mil WL and 500k term (with PUA rider) "

Ok, very good company. Consider dropping the term rider as the cash values and whole life death benefit grows (PUA buy paid up death benefits)

"Say the policy has 2mil in cash value and 4 mil death benefit at 65 how can I use this to extract say 100k a year to live off for 20 years or so. It seems like with loan interest and premiums needing to get paid yearly that the policy hits critical mass down the road and fails? Am I not seeing something right?? Thanks for your responses"

Now I am not the agent and don't know exactly how he set this up so I will try to explain in general terms that might apply....

When you hit 65 you can take in a combination of dividend surrenders and loans the 100k without tax consequences. Dividend surrenders will come from that PUA part of your policy and policy loans directly from the cash values. Now in what proportion you would take of each of these would simply be doing the math and seeing which gives you the best bang for the effort. 50/50? 75/25? 100/0? or 0/100? don't know till you pencil it out. The nice thing is you have the Flexibility to do that and even make a different election every year.

When you make this move the surrender of PUAs has no interest issues. None. You are correct about loans and loan interest. What you may do is switch your future dividend elections to reduce any interest on the loans and pay down the loan balance. Usually, the interest due and dividend paid wipe each other out so the plan slowly either creeps downward in loan debt or slowly rises.

Again, didn't write this business, don't know what bells and whistles may be installed. As far as dying with a loan balance, it is subtracted from the death benefit.

Don't know your agent, but do know the company. I have written guardian for my kids, when I could write just about anybody. They are a good choice.

Thanks Gilmore,
Will look into it now it makes some sense