Problem Needs Solving

[hockeyguy]

Ok experts, what say u? I lurked here yesterday for only 20 minutes but i can see that there sre some like minded agents here. Heres my issue.
A client has a VUL he bought 11 yrs ago. He has 4 of them but lets talk about 1. Premiums r 11k/yr & theres a 1mil death benefit. Hes 55 standard tobacco now and there r no loans. The prob is the policy is only projectd to last 12 yrs at current expenses and 6%.....which tells me itll b over in 9. I couldnt find him a suitable replacement for near the same premium so i am about to suggest him having it reprojected w a 500k db and the same premiums....wdyt? I have a love hate w VUL'S. I love to find them as there is a valid replacelent oppty many times.
Appreciate any ideas.....

 

[Bobrobb]

BNTRS can answer this. Or Nathan. I can't unfortunately. I can however fix your golf swing.

 

[BNTRS]

1 mill when he was 45 and an 11k outlay was a tad on the light side, though not extremely far off.

What kind of cash does he have remaining and where have you looked?

Is the VUL out of surrender? If not what's the surrender charge for this year?

If you reduce there are two obstacles:

1. If he's still in surrender, that will effect his cash value on a pro rata bases.

2. He's within 15 years so the 15 year force out is still in play (though probably not a big concern given the fact that his policy is likely to lapse, i.e. not flush with cash).

At 55 and $500k it's reasonable to think perm death benefit coverage is doable at $11k or less with way more stability than a VUL (that's stuff is bought either by kids in their 20's or Executives with specialized COLI products if at all).

What are his sub accounts in and how have they performed? Of course note as well as they were assumed to, but a general idea is nice.

Oh I should also ask, GPT or CVAT?

If GPT, what is the guideline premium?

BNTRS can answer this. Or Nathan. I can't unfortunately. I can however fix your golf swing.

Thanks!

 

[hockeyguy]

Thank u for the detailed response...it is apparent u know more than i about these products. It appears we both agree these policies have specialized applications. I will have to look at the IFL for some of those details , however, I wont find the sub accounts as i discarded them. Unfortunately, I did a thorough search for the best rate on a new policy and only hancock stepped up with a table shave standard tobacco at ~ 80k for 2 mil ( total in place). There is no replacement solution here....i am merely trying to help him manage damage. I dont thimk there are any surrender charges left and ~40K in cash left. While he can afford this, i only wish there was a fix. He prolly would have spent 40k to buy a GUL policy, but not 80.

1 mill when he was 45 and an 11k outlay was a tad on the light side, though not extremely far off.

What kind of cash does he have remaining and where have you looked?

Is the VUL out of surrender? If not what's the surrender charge for this year?

If you reduce there are two obstacles:

1. If he's still in surrender, that will effect his cash value on a pro rata bases.

2. He's within 15 years so the 15 year force out is still in play (though probably not a big concern given the fact that his policy is likely to lapse, i.e. not flush with cash).

At 55 and $500k it's reasonable to think perm death benefit coverage is doable at $11k or less with way more stability than a VUL (that's stuff is bought either by kids in their 20's or Executives with specialized COLI products if at all).

What are his sub accounts in and how have they performed? Of course note as well as they were assumed to, but a general idea is nice.

Oh I should also ask, GPT or CVAT?

If GPT, what is the guideline premium?






Thanks!

 

[hockeyguy]

I did reply, however, it must have gotten lost.

Thanks you BTNRS...you obviously know a bit more about this product than I do. I know how to read these projections at varying rates of returns with current charge and usually don't like what I see.

I agree that these are sold to the types of individuals you mention, however, I would argue that many additional victims bought these products...why? Probably because this is what they were sold and were unaware of the alternatives.

Back to my question and yours:

I would assume he is out of surrender as the CV and Net CV value columns are equal

I wish I could find a suitable product for him and I have to say at 55, tobacco, 500k cannot be purchased for 11k/yr:(

I did a comprehensive search and informal inquiry to locate only 1 company that would offer a standard permanent product (with the table shave)...this was hancock. IDK if they offer a WL in New York, however, the GUL to age 90 was 63k/yr w/o any 1035 exchange. Even when I matched up the numbers assuming the exchange, I could not make a suitable argument for replacement.

With a table rate, a 500k, 15 yr term was $8500/yr.

This is why I am asking your opinion on reducing death benefit on his current plan whilest maintaining the current premium.

Was it set up with the CVAT or GPT, I do not know...is this a critical factor on a go forward? While I had all of the in forces, I only kept what I felt was critical, the illustration pages.

I don't have the info o the sub accounts either....


I appreciate your information and help.

 

[BNTRS]

I did reply, however, it must have gotten lost.

Thanks you BTNRS...you obviously know a bit more about this product than I do. I know how to read these projections at varying rates of returns with current charge and usually don't like what I see.

I agree that these are sold to the types of individuals you mention, however, I would argue that many additional victims bought these products...why? Probably because this is what they were sold and were unaware of the alternatives.

Back to my question and yours:

I would assume he is out of surrender as the CV and Net CV value columns are equal

I wish I could find a suitable product for him and I have to say at 55, tobacco, 500k cannot be purchased for 11k/yr:(

I did a comprehensive search and informal inquiry to locate only 1 company that would offer a standard permanent product (with the table shave)...this was hancock. IDK if they offer a WL in New York, however, the GUL to age 90 was 63k/yr w/o any 1035 exchange. Even when I matched up the numbers assuming the exchange, I could not make a suitable argument for replacement.

With a table rate, a 500k, 15 yr term was $8500/yr.

This is why I am asking your opinion on reducing death benefit on his current plan whilest maintaining the current premium.

Was it set up with the CVAT or GPT, I do not know...is this a critical factor on a go forward? While I had all of the in forces, I only kept what I felt was critical, the illustration pages.

I don't have the info o the sub accounts either....


I appreciate your information and help.

I misread your post, I thought you types standard non-smoker but it's standard smoker, that does indeed present a problem.

Yes, it's reasonable to assume that if cash value and cash surrender value are equal, he's likely out of surrender. This is good news.

The reason I asked about GPT and CVAT is because he may need to up his outlay or allow the lapse. He may talk the big talk about letting it lapse now, but when the time comes, he may have a different opinion.

If this is GPT and he's been somewhat underfunding it all these years, he's going to run into a significantly narrower corridor as time rolls on. What this means is, he may not be able to place enough cash into the policy to keep it in force without violating TEFRA/DEFRA and losing life insurance status on this policy. At which point, keeping it in force might be unadvisable in general, maybe.

I would run an inforce with the reduced DB and see where this goes. I think I'd also go back and look at available sub accounts and look for bond funds.

 

[hockeyguy]

Thank you for the quick response. I will have them reproject and see what it looks like. Yes indeed, he is in a pickle and I am unable to free him from it w/o significant differences in premium outlay.

I really wanted to show hm a GUL at 30K, but we just never got to preferred, tobacco.

Even the hancock stop smoking product was good, hoewver, he wouldn't commit to it.

I'll let you know and probably ask opinions again once the infomation is recieved.

all best,

hockeyguy