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Old 09-02-2015, 02:54 PM   #1
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Hi everyone! Hope you can give me some sage advice. My dad has a whole life policy through American General (AG). He opened back in 1958! I am the beneficiary. Face value is $25K. ETI coverage: approx $28K. RPU coverage: $26,850. My dad still sends them a check reliably every month. He has a $4K loan out against the policy. He did not know he had so much equity built up in the policy, and he is mulling over surrendering the policy, or at least taking out another loan, simply to put that money in his checking account for a rainy day. What should he do specifically and in general? I have learned from AG that I will only receive the face value of the policy when he does pass on, so I am wondering if loans get repaid from the face value, the ETI coverage (don't know what that even means), or the RPU coverage. Your thoughts? Thx!! Kooky emoticons!
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Old 09-02-2015, 02:59 PM   #2
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Newbie Whole Life Questions Re: Newbie Whole Life Questions
Originally Posted by RoboLobo View Post
Hi everyone! Hope you can give me some sage advice. My dad has a whole life policy through American General (AG). He opened back in 1958! I am the beneficiary. Face value is $25K. ETI coverage: approx $28K. RPU coverage: $26,850. My dad still sends them a check reliably every month. He has a $4K loan out against the policy. He did not know he had so much equity built up in the policy, and he is mulling over surrendering the policy, or at least taking out another loan, simply to put that money in his checking account for a rainy day. What should he do specifically and in general? I have learned from AG that I will only receive the face value of the policy when he does pass on, so I am wondering if loans get repaid from the face value, the ETI coverage (don't know what that even means), or the RPU coverage. Your thoughts? Thx!! Kooky emoticons!
one thought would be stop paying on it and switch it to self pay........

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Old 09-02-2015, 03:09 PM   #3
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Newbie Whole Life Questions Re: Newbie Whole Life Questions RoboLobo is the thread starter for: Newbie Whole Life Questions

I asked AG about that, and that is where the whole RPU came into play. Basically I simply wanted the premiums deducted from his policy value. Is that truly what RPU is all about? And of course I am utterly confused (see my post) as to what to do, what is most advantageous for both me and my dad. I guess what confuses me is the thought that my dad will continue to build equity in the policy over the face value, is there any point to that? Hence my question about the repaying of the loan against which value. Thanks!
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Old 09-02-2015, 03:16 PM   #4
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Newbie Whole Life Questions Re: Newbie Whole Life Questions
Originally Posted by RoboLobo View Post
Hi everyone! Hope you can give me some sage advice. My dad has a whole life policy through American General (AG). He opened back in 1958! I am the beneficiary. Face value is $25K. ETI coverage: approx $28K. RPU coverage: $26,850. My dad still sends them a check reliably every month. He has a $4K loan out against the policy. He did not know he had so much equity built up in the policy, and he is mulling over surrendering the policy, or at least taking out another loan, simply to put that money in his checking account for a rainy day. What should he do specifically and in general? I have learned from AG that I will only receive the face value of the policy when he does pass on, so I am wondering if loans get repaid from the face value, the ETI coverage (don't know what that even means), or the RPU coverage. Your thoughts? Thx!! Kooky emoticons!
Really depends on what your dad wants to accomplish.

Sounds like it may be an old dividend paying policy. If so the dividend may be high enough to pay both loan interest and the premium. Or at least the majority of it. As Sti said it can Reduced Paid Up (RPU) meaning he does not pay it any longer. There may be dividend he can take out. That will not create a loan or reduce the original face amount (minus the loan) and not incur loan interest. You are the beneficiary so maybe he could take a small loan, transfer ownership to you, you pay the premiums, have the dividend buy paid up additions or pay toward the loan.

In short there are a lot of ifs and ors. What does he want? Find that out then have the company run the options. Or better yet have your agent, Assuming they are independent, review this for you.

Lee

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Originally Posted by RoboLobo View Post
I asked AG about that, and that is where the whole RPU came into play. Basically I simply wanted the premiums deducted from his policy value. Is that truly what RPU is all about? And of course I am utterly confused (see my post) as to what to do, what is most advantageous for both me and my dad. I guess what confuses me is the thought that my dad will continue to build equity in the policy over the face value, is there any point to that? Hence my question about the repaying of the loan against which value. Thanks!
No, you are talking about doing a loan every year to pay the premiums. That will not only reduce the face amount by the loan amount but incur interest that will reduce the face even more.

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Also on getting your agent to help. That is also assuming he is not a "specialist" Term only, FE only, Annuity only, Medsupp only, IUL only guy. You want somebody that understands what you have.

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Old 09-02-2015, 03:34 PM   #5
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Newbie Whole Life Questions
Originally Posted by WinoBlues View Post
Really depends on what your dad wants to accomplish. Sounds like it may be an old dividend paying policy. If so the dividend may be high enough to pay both loan interest and the premium. Or at least the majority of it. As Sti said it can Reduced Paid Up (RPU) meaning he does not pay it any longer. There may be dividend he can take out. That will not create a loan or reduce the original face amount (minus the loan) and not incur loan interest. You are the beneficiary so maybe he could take a small loan, transfer ownership to you, you pay the premiums, have the dividend buy paid up additions or pay toward the loan. In short there are a lot of ifs and ors. What does he want? Find that out then have the company run the options. Or better yet have your agent, Assuming they are independent, review this for you. Lee ---------- No, you are talking about doing a loan every year to pay the premiums. That will not only reduce the face amount by the loan amount but incur interest that will reduce the face even more. ---------- Also on getting your agent to help. That is also assuming he is not a "specialist" Term only, FE only, Annuity only, Medsupp only, IUL only guy. You want somebody that understands what you have.
And I'd b careful about having an American General agent come look at it. I've seen them tell people to cash in the WL and take out a 5 year or so guarantee UL. Not exactly a guarantee, but definitely puts the Insured in a much worse position
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Old 09-02-2015, 03:42 PM   #6
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Newbie Whole Life Questions Re: Newbie Whole Life Questions
RPU is just what he can be left with if he chooses to stop paying premiums today. He must inform AG that he is deciding to take that option though.

The Loan will not be paid back from the Death Benefit. The current DB is accounting for the Loan he took already.

Ask the customer service people if he can divert the Dividends to pay the Premium and Loan interest.

How old is he? What he has here is a supercharged tax-free savings account with no limit on how much money he can dump into it. I would keep it and utilize this feature of it if I were him.

At the very least have the Dividends pay the premium/loan interest, or take the RPU option.
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Old 09-02-2015, 04:31 PM   #7
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Newbie Whole Life Questions Re: Newbie Whole Life Questions
Originally Posted by Gooner View Post
And I'd b careful about having an American General agent come look at it. I've seen them tell people to cash in the WL and take out a 5 year or so guarantee UL. Not exactly a guarantee, but definitely puts the Insured in a much worse position
^^^^^ That ^^^^ I have seen it as well.
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Old 09-03-2015, 08:35 AM   #8
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Thank you everyone for all your sage advice. If you don't mind, I am going to ask some maddeningly simplistic questions to continue to clarify all this for me:

1) Apart from the convenience factor, is there another benefit from having the policy premiums and the loan interest paid from the dividend? My pop might just get a kick about writing a check every month.

2) If the premium is paid from the dividend, are we talking about a annual premium payment (about $500) as opposed to monthly payments?

3) Same question about the loan interest: annual I presume?

4) Setting aside those questions for a moment, if my dad wants cash right now (something about a Russian bride ha ha, just kidding I hope), is he simply able to have his $5K dividend sent to him in cash as opposed to taking out another loan? Advantages, disadvantages?

5) If, in order to pay the premiums and loan interest via the dividend, he has to do the RPU option, should he take out his loan prior to making the switch to RPU? It has been speculated he would lose the cash value option if he goes RPU, I am trying to confirm that with AIG.

6) Before I forget, I posed some of these questions to my own insurance agent, so if he continues to read this thread I just want to say Kory is the greatest!

Thanks again for all your help!

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I should just add that the genesis of all this was finding out my dad had much more equity in this policy than he thought. The idea started out as "let's take all the money out and put it into my savings account for no particular reason", especially as we have determined there is no taxable gain. Since then I am working on a more reasonable cash withdrawal while trying to preserve the benefits of the policy for both my dad and me. He will not have any interest in putting more $$ into the policy. I should also mention that subsequent to any immediate cash withdrawal the balance will need to be available to possible future living expenses, including assisted living. We are now probably getting into power of attorney issues, but how can I access the policy if he is unable to? Thanks again!
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Old 09-03-2015, 10:47 AM   #9
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Newbie Whole Life Questions Re: Newbie Whole Life Questions
Originally Posted by RoboLobo View Post
Thank you everyone for all your sage advice. If you don't mind, I am going to ask some maddeningly simplistic questions to continue to clarify all this for me:

1) Apart from the convenience factor, is there another benefit from having the policy premiums and the loan interest paid from the dividend? My pop might just get a kick about writing a check every month.

2) If the premium is paid from the dividend, are we talking about a annual premium payment (about $500) as opposed to monthly payments?

3) Same question about the loan interest: annual I presume?

4) Setting aside those questions for a moment, if my dad wants cash right now (something about a Russian bride ha ha, just kidding I hope), is he simply able to have his $5K dividend sent to him in cash as opposed to taking out another loan? Advantages, disadvantages?

5) If, in order to pay the premiums and loan interest via the dividend, he has to do the RPU option, should he take out his loan prior to making the switch to RPU? It has been speculated he would lose the cash value option if he goes RPU, I am trying to confirm that with AIG.

6) Before I forget, I posed some of these questions to my own insurance agent, so if he continues to read this thread I just want to say Kory is the greatest!

Thanks again for all your help!

----------

I should just add that the genesis of all this was finding out my dad had much more equity in this policy than he thought. The idea started out as "let's take all the money out and put it into my savings account for no particular reason", especially as we have determined there is no taxable gain. Since then I am working on a more reasonable cash withdrawal while trying to preserve the benefits of the policy for both my dad and me. He will not have any interest in putting more $$ into the policy. I should also mention that subsequent to any immediate cash withdrawal the balance will need to be available to possible future living expenses, including assisted living. We are now probably getting into power of attorney issues, but how can I access the policy if he is unable to? Thanks again!
Your last couple sentences - become the owner.
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