Need Help with Insurance Review

The Hunter · 07-27-2009, 08:40 PM

I am doing a UL Review for a Friend. I don't do a lot of them , Here is why I am puzzled:

Policy Value "Flexible Premium Adjustable life"

$150.000. Face Amount 100.00 premium on 46 yr.old female. issued 7/11/2007

Opening balance
jul 11,2008 $775.72

Premiums received 1200.00
Premium charge 36.00-
COI 306,22-
Administrative Charge 120.00-
Contract charge 3.84-
Coverage expense charge 81.00-
Interest 41.21

No withdrawals
-----------------------------------

Policy value $1469.87
July 10 2009

If surrendered
Surrender charge $3,723.10-

lapses in 25 years at 3% guarantee

1. question where are these surrender charges accumulating from .
2. If she cancels what is her actual liability.

3. with this limited info what is your assessment

dgoldenz · 07-27-2009, 10:21 PM

1. All UL policies have surrender charges as far as I've seen

2. If she cancels, she doesn't owe anything. The surrender charge just offsets the cash value accumulation in the first few years of the contract. With most companies, it is an amount that declines over a 20 year period.

3. What are you trying to assess?

Is there a reason she's paying $1200/year for a policy that might lapse? Even at standard nonsmoker rates, she could get a $150k UL policy with a no-lapse guarantee for less premium. If she's in good health, potentially as low as ~$70/month.

insuranceexec · 07-27-2009, 10:40 PM

If you are looking for cash accumulation; do a 1035 exchange and transfer the cost basis.

You are in good hands with dgoldenz.........I hope this helps......

scotty · 08-01-2009, 03:55 PM

She only has a small cash value, you can cancel the policy she wont be charged anything. I hate UL policies and replace everyone I come across with whole life.

dgoldenz · 08-01-2009, 06:10 PM

Originally Posted by scotty

She only has a small cash value, you can cancel the policy she wont be charged anything. I hate UL policies and replace everyone I come across with whole life.

Every one of them? Really? So whole life fits the objectives of EVERY single person you come across? That's impressive. Would you replace a $500k no-lapse UL with a $200k whole life policy for a client who wants to keep the same premiums?

scotty · 08-02-2009, 08:51 AM

Ok, not in that instance. Not may companies offer the non lapse policy. But if she thinks it has cash value which she can use later then yes. She would be better with whole life.

dgoldenz · 08-02-2009, 11:13 AM

Originally Posted by scotty

Ok, not in that instance. Not may companies offer the non lapse policy. But if she thinks it has cash value which she can use later then yes. She would be better with whole life.

Almost every major company offers a no-lapse UL policy....