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Gopt a client that we are converting his term to perm. New premium is a little out of reach for them. They need the coverage but do not qualify for a new policy due to medical issues. (brain cancer - removed and undergoing treatment)Age 54.
Has $115K in a 401(k) from old employer. Thought about rolling over to an annuity and then doing a 72(t) distribution on the annuity for 6 years (age 60) and then possibly income stream or up to 10% withdrawals. Would like to leave money for retirement....need $8K to pay premium. At $115K the 72(t) rough payment is around $5300. They could cover the difference. He has to be clear of the cancer for 5 years to try and qualify for something new so our plan is in year 6 (age 60) to try to get medical underwritten new policy.
He could let the term renew every year for less than the $8K in premium (at least until year 7 in which it is more than the perm) and give up the conversion. But what if he can't qualify for anything down the road.
I think the conversion then a 1035 exchange down the road should it be better may be a better option. I know the premium may be higher - but he may be able to get into a better product with lower COI than the conversion option plan.
THoughts?
Has $115K in a 401(k) from old employer. Thought about rolling over to an annuity and then doing a 72(t) distribution on the annuity for 6 years (age 60) and then possibly income stream or up to 10% withdrawals. Would like to leave money for retirement....need $8K to pay premium. At $115K the 72(t) rough payment is around $5300. They could cover the difference. He has to be clear of the cancer for 5 years to try and qualify for something new so our plan is in year 6 (age 60) to try to get medical underwritten new policy.
He could let the term renew every year for less than the $8K in premium (at least until year 7 in which it is more than the perm) and give up the conversion. But what if he can't qualify for anything down the road.
I think the conversion then a 1035 exchange down the road should it be better may be a better option. I know the premium may be higher - but he may be able to get into a better product with lower COI than the conversion option plan.
THoughts?