Mass Mutual vs Penn mutual

[Allen Trent]

Lets be very clear the policy is clearly a mec because of the withdrawal.
Had I not taken the withdrawal the policy would not MEC .
The PUA caused a material change the withdrawal caused the policy to become a MEC.
Here I have included a picture showing where the material change takes place.
The distribution caused the policy to fail a 7 pay test.
I have only triggered a recapture ceiling by accident and had no idea what it was, so I had to call actuarial.
I used Guardian software for this. Penn is very similar. They both have fields to check off to prevent this.
Mass more plug and play.

tried to match up to this illustration. I put in large 11th year Surrender of PUAR & not showing it triggering MEC on the illustration (could be carrier flaw).







I even jacked up the 11th year distribution to $500k. $454 PUAR surrender & balance as loan & still didnt trigger the MEC symbol. Soooo, could be a software problem or something & will be talking with actuaries & tax people on this.

Note-- I matched the PUAR you had on here, but this policy would have taken another 11k into PUAR for a total of $44,500 PUAR & $14,920 base & been under the $59,471 7pay premium

 

[Lloyds of Lubbock]

Alan,
I don't know what to tell you.
If you want to talk with your companies actuaries, you can ask them if a withdrawal can cause a MEC.
I don't know whose software you used and dont know what product you used.
You may want to ask the carrier if a withdrawal can cause a MEC.
Here I used penn software and the withdrawal caused a MEC.
I had to take two pictures.
If I use Mass I can get a similar result.

 

[Allen Trent]

Alan,
I don't know what to tell you.
If you want to talk with your companies actuaries, you can ask them if a withdrawal can cause a MEC.
I don't know whose software you used and dont know what product you used.
You may want to ask the carrier if a withdrawal can cause a MEC.
Here I used penn software and the withdrawal caused a MEC.
I had to take two pictures.
If I use Mass I can get a similar result.

Yeah, definitely something I am looking into. Ipipeline is the software vendor, but they design to carrier specs, so I am guessing it is carrier.

So, the issue is likely that the ongoing PUAR payments are restarting a 7 pay test every year for that new PUAR payment. That differs from UL increasing products where the face had no material change. Same for a large single pay via 1035 where the dividend continues to buy more PUAR but no new premium from outside the policy came into the policy like happens with ongoing modal PUAR purchases

Glad I stumbled back on this thread after a week or 2.

 

[Lloyds of Lubbock]

Alan,
I could not find the illustration that shows a recapture ceiling.
Honestly when it happened I had no idea what it was.
I would be curious if all companies checked for it.....not curious enough to sit on my computer and try with various carriers to generate this.
I did save the message that was generated and attach it

 

[Allen Trent]

Alan,
I could not find the illustration that shows a recapture ceiling.
Honestly when it happened I had no idea what it was.
I would be curious if all companies checked for it.....not curious enough to sit on my computer and try with various carriers to generate this.
I did save the message that was generated and attach itView attachment 7635

Very interesting. Never heard of it either. Think of all these max funding PUAR cases over the years, especially with some aggressive designs of intentionally using as retirement savings instead of 401k. Never seen this recapture ceiling at all & if there was talk of MEC from distributions I also missed that

Thanks for sharing

 

[Tahoe Ray]

Very interesting. Never heard of it either. Think of all these max funding PUAR cases over the years, especially with some aggressive designs of intentionally using as retirement savings instead of 401k. Never seen this recapture ceiling at all & if there was talk of MEC from distributions I also missed that

Thanks for sharing

I'm not the expert on WL that you two are, but I have never heard of this either. What a great thread started by a consumer doing some necessary due diligence (who had two silly agents competing on guarantees/dividends for his/her business).

This is why you should be a lot pickier about your agent than the product itself.

 

[Allen Trent]

Alan,
I could not find the illustration that shows a recapture ceiling.
Honestly when it happened I had no idea what it was.
I would be curious if all companies checked for it.....not curious enough to sit on my computer and try with various carriers to generate this.
I did save the message that was generated and attach itView attachment 7635

I read this link below, but still don't fully understand. Almost seems to indicate recapture is because of a face change. In your case, any chance the carrier is permitting a base policy face reduction:

CCH AnswerConnect | Wolters Kluwer

 

[scagnt83]

Alan,
I could not find the illustration that shows a recapture ceiling.
Honestly when it happened I had no idea what it was.
I would be curious if all companies checked for it.....not curious enough to sit on my computer and try with various carriers to generate this.
I did save the message that was generated and attach itView attachment 7635

Ive noticed that message from Guardian before as well when overfunding. I forget what design I was running now, but ive seen it a few times.... and there were no distributions on my design either.

 

[Allen Trent]

Ive noticed that message from Guardian before as well when overfunding. I forget what design I was running now, but ive seen it a few times.... and there were no distributions on my design either.

The scary part is we are the "experts"

 

[scagnt83]

I read this link below, but still don't fully understand. Almost seems to indicate recapture is because of a face change. In your case, any chance the carrier is permitting a base policy face reduction:

CCH AnswerConnect | Wolters Kluwer

Clear as mud, right? I currently have this doc open in 3 different tabs trying to follow the recapture wording (since it refers to previous sections of the document).

Looks like multiple scenarios could trigger this since there are different rules for before 5 years and year 6-16.

The 2 year lookback at past distributions is very interesting.

From my understanding, in the first 5 years scenario, essentially, if the pre-distribution CV is greater than the post-distribution Net Single Premium, then the recapture window is triggered.