Newborn Policy?
- Thread starter HoosierLife
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- #12
- 6,994
Thanks! With the $50,000 guaranteed insurability rider, does that mean I can only add a max of $50,000 throughout the lifetime of the policy? When you showed age 18s numbers, were those based on increasing the premium over the years? And if so, by how much?
And let's say I went with the life pay, what I keep that policy or give it to my son at age 20-ish? Or my going to continue to use that to over fund and take loans out of it?
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Also, I have been running some quotes from RNA and they offer a lot more death benefit per dollar premium. What's the negative with them?
- 10,342
The GIO Rider lets you add that amount at certain ages or major life events. You can add that amount each time. It is not a cumulative amount.
With Guardian, the GIO options for a child policy are:
Marriage
Adoption
New home
Income increase of 20% or more
Ages- 25/28/31/34/37/40/43/46
You can do whatever you want at that point. If you transfer ownership to your son I would wait until he is 30... or at least until he is well off and on his feet financially.
And technically the GIO Rider actually issues a new and separate policy... so another option would be to keep the original, and exercise the GIO and give that policy to your son.
So you could just exercise the GIO at each of those above points and give that policy to him.
Keep in mind that if you transfer ownership of the original policy to him, that would likely be a taxable event for him.
But it just all depends on what you feel is best at the time. If you decide to put in a few thousand per year, I would recommend keeping it. If just $50/m, it probably wouldnt matter too much either way
First, make sure you are comparing apples to apples. Are you running a 20pay, P65, P99, P121??? The length of payment will dictate how high the DB is per dollar of premium.
RNA will not grow the DB or CV at as high of a rate as Guardian or Mass. So you also want to compare 20 and 40 years down the road, not just the initial figures. And GL/MM will certainly grow a much higher CV than RNA will.
For example, a GL P121 (pay premiums until age 121), is $60/m for $150k DB.
At age 18, the DB is $177k & CV is $11k.
At age 40, the DB is $250k & CV is $56k.
And that is without overfunding the policy.
- Thread starter
- #14
- 6,994
Ok as an FE agent I don't understand how the DB increases? Dividends?
I don't think RNA pays dividends.
I don't think RNA pays dividends.
- 10,342
Yes it increases through dividends. The CV builds without dividends, but not as much as if it receives dividends.
As some agents always like to point out, dividends are not guaranteed, neither is the dividend rate if they do issue a dividend that year.
However, Guardian/Mass/NYL/NWM have all consistently paid a dividend every single year for over 150 years now.
So to assume or insinuate that the policy will not receive dividends is ignoring 150 years of history...
The dividends are based on carrier performance as well as interest rates (which help dictate investment performance for the carrier). So some years are slightly more, some slightly less.
Personally, I feel that current dividend scales are positioned well to be fairly close to accurate over the next 10-20 years. Since they go up and down with interest rates, as rates rise over the next 10 years, it is totally plausible that dividends will remain the same or even likely rise. That being said, illustrations are just an estimate. I can 100% guarantee that your policy will have values that are either slightly over or slightly under the illustrated values (since the illustration uses a constant dividend rate and the carrier will usually adjust the dividend rate slightly each year)
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