Survivorship Indexed Universal Life for cash value accumulation

In a quote comparison of Survivorship Indexed Universal Life (IUL) products with cash value accumulation as the objective, Penn Mutual outperformed the competition with their “Survivor Plus IUL” plan.

A Surviviorship Indexed UL, second-to-die benefit, will tend outperform an individual Indexed UL for cash value accumulation.  The cost of insurance on two lives for one death benefit is lower than on a single life, so it makes sense for a couple to consider a survivorship product.

Here were the parameters for this case study:

Premium Amount: $250,000
Solve For:  Minimum Non-MEC *
Death Benefit Option: Increasing
Illustrative Rate assumption: 6% (all years);  S & P 500 annual point-to-point
insureds:  both mid ’50’s, both preferred non tobacco
objective: cash value accumulation, downside protection

Penn Mutual was able to solve as a “3 pay”, dividing the $250,000 premium into three annual payments, and maintain competitive cash value accumulation to a 4 pay, which is unusual.  When evaluating  a limited pay scenario, one works down from a “7 pay” non-MEC structure to see where optional cash value accumulation occurs. A 5 pay or 4 pay is most common.  Penn Mutual’s cash value accumulation was superior to the competition looking at years 5, 10, 15 and 20 and on out in 5 year increments.  PennMutual’s has a 2% floor on both its fixed and indexed account, giving their product superior downside protection.

Each case is different in age, health, premium amount and objectives, so it’s not a hard and fast conclusion that PennMutual Survivor IUL will be the superior product, but the next time a cash value accumulation case comes up Penn Mutual will be serve as a benchmark.

  •  Non-MEC =  not a Modified Endowment Contract

Survivorship Guaranteed Universal Life at 50 something

After reviewing yesterday 13 major life insurance carriers for a couple in excellent health in their early 50’s for Survivorship Guaranteed Universal Life, multimillion limited pay some companies were clear leaders for lowest premiums:

American General Life Insurance Company: “AG Secure Survivor GUL”
Pruco Life Ins. Co.  (Prudential):  “PruLife SUL Protector”
Nationwide Life and Annuity Insurance Co:  “YourLife No-Lapse Guarantee SUL II”

American General also has guaranteed cash value accumulation, and a versatile option to reduce the face amount and access that cash value while maintaining the lifetime guarantee.

The most competitive premiums are subject to age, face amount and health status.  When shopping for life insurance for estate planning a thorough search is advisable to verify which are the most competitive.  However certain carriers will tend time and again to have lowest premiums.

Sean Drummey

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Phone: (910) 328-0447
Text: (910) 803-1427
email: spdrummey@gmail.com

New Survivorship product from American General Life

American General Life Insurance Company has introduced  “Secure Survivor GUL”.  Survivorship Insurance, also called Second-To-Die Insurance, is designed for couples for estate planning purposes. It is less expenses than individual coverage.

Key Features:

Guaranteed Universal Lifurvivor GUL”e (GUL)  guaranteed not to lapse, no lapse, with timely premium payments; guaranteed death benefit and premiums.

Guaranteed cash value accumulation

Ability to reduce the death benefit and premiums in future years.  Pro-rata partial withdrawals of cash value permitted while maintaining the age 121 lifetime guarantee.

  • For example male and femal age 64 both preferred non tobacco,  $4,000,000 policy,  $44,853 premium.  Accumulates $543,682 guaranteed cash value at age 84.   Access half the cash value $271,841 (less withdrawal fee) maintain half the death benefit $2,000,000 policy, $22,427  new guaranteed premium – guaranteed to age 121

Return of premium feature: one-time option at end of policy year 15 for return of up to a maximum of 100% of premiums paid, a no cost rider

Comments:  American General’s product has what they call optionality.  The choice to reduce the death benefit, premiums and accessing the guaranteed cash value while maintaining the lifetime guarantee, as well as the option to return premiums in year 15 are very valuable and flexible options.  The guaranteed cash value accumulation is another useful plus to this product, unlike most Guaranteed ULs which build little or no cash value making premium payments and lapse protection much less flexible over the course of the policy.

Life insurance to pay off a reverse mortgage

First let’s assume a homeowner does adequate research including taking a long hard look at the disadvantages and alternatives decides a reverse mortgage appropriate for their situation. Granted, many homeowners will need every penny of this money, but some may desire to tap into home equity for discretionary funds and have broader goals.  For example, those who want an heir to keep the house, life insurance is a means to pay off the reverse mortgage’s loan balance.

For those in average or better than average health, life insurance is readily available in one’s 60’s, 70’s, and even 80’s.   For joint policies only one of a couple needs to be healthy to qualify; the other can be uninsurable.

There are two forms of life insurance: term and permanent.   Term level premium ends in 10, 15 or 20 years, so in generally term is not suitable to cover a reverse mortgage’s lifetime commitment.  For permanent there is whole life and universal life, which comes in many forms.  The best product to cover a reverse mortgages is guaranteed universal life.   It’s fixed rate and coverage for life, usually to age 121.   All the policyholder has to do to is pay the premiums on time.   Couples can get joint coverage, also known as second to die coverage, with a joint survivor guaranteed UL.  How much does a guaranteed UL cost?   There are sample rates by age on the right hand side for individuals.   Please contact me for your own personalized quote.  Here’s an example.

Mr. and Mrs. Jones, both 73 and in good health, needs funds for retirement but want to leave their lakeside home to their daughter, so they decide upon a reverse mortgage.  They qualify for a lump sum payment of $250,000.  They take out a $350,000 joint survivor life insurance policy so their daughter may pay back interest and principal on the loan, and also as a contingency against declining home value.  A $350,000 joint survivor guaranteed UL with Prudential is $650.00 a month, at the preferred non tobacco rate.

If this couple were in average health, this Prudential joint coverage is $887.00 a month at the standard rate.  To show you how joint policies compare to individual, using this example a $350,000 individual policy for a woman is $768.38 a month with Lincoln National and $1,009.23 a month for a 73 year old man with Banner Life.

Keep in mind the heirs can be the owners and beneficiaries of life insurance policy and pay a portion or all of the premiums.

Review of best life insurance companies for quitting tobacco

Non smoker Plus rates for Prudential  no cigarettes within the last 12 months, may smoke cigars, pipe or chew tobacco, nicotine patch, nicorette gum

John Hancock:  “Protection UL” Quit Smoking Incentive: receive standard non smoker rates first three policy years, with satisfactory evidence quit smoking for 12 months during those years receive permanent reclassification of standard non smoker

 

 

Preferred Plus:   No Tobacco for 3 years

Banner Life
Lincoln National
North American   (ages 70 and under)
Aviva   (permanent products)
Axa/Equitable  (permanent products)
Preferred Non-Tobacco:  No Tobacco for 1 year

Nationwide
Principal
Symetra


Preferred
Non-Tobacco:   No Tobacco for 2 years

Banner Life
John Hancock
Lincoln National
North American  (ages 70 and under)
Protective Life
Transamerica

Standard Plus:  No Tobacco for 1 year

American General

 

 

 

last revised: 5/21/2013, accuracy or completeness not guaranteed; please check with company for full details, terms and conditions may vary

Indexed Survivorship Life Insurance

Indexed Survivorship Universal Life increases the upside cash value potential by having interest indexed to equities.  No money is actually invested in equities, so there is less downside risk, as with variable universal life.

Compared here is Prudential,  the most competitive guaranteed survivor universal life (GSUL) at age 65, verses North American’s Survivorship GIUL , guaranteed indexed universal life.

Continue reading “Indexed Survivorship Life Insurance”

Couple considers life insurance as estate plan for children

A couple nearly 70 years old and in good health asked a newspaper financial columnist if it was too good to be true that a $200,000 life insurance policy could provide an $800,000 tax free benefit for their children.

Well, $800,000 sounds like a bit of a stretch, especially if you want to play it safe with a guaranteed policy.  Hovever, the general concept is valid.

They are talking here about a survivorship universal life policy, called a SUL or second-to-die.   And they’re probably talking about the $200,000 as a single pay, one single lump sum payment with no further premiums.    The columnist gave a fairly good answer, and warned about guaranteed and non guaranteed elements.   Well, that’s a traditional SUL, and to get anywhere near $800k with a $200k single pay, you’d have to look at a SUL.

There is also Guaranteed SUL, of G-SUL.  The benefit won’t be as high, but it’s guaranteed to age 120, so you don’t have to worry about the policy’s performance or outliving your policy.

Here’s what a Guaranteed SUL looks life for someone in “good” health.  Two rate classes, preferred and Non-Smoker Plus, with Prudential are health rates that mean good.  Prudential is generally the strongest carrier right now for G-SUL, but you would have to compare rate given the couple’s health factors.

Continue reading “Couple considers life insurance as estate plan for children”

Survivorship Universal Life: New Products

For those couples involved in estate planning, there are survivorship life insurance policies, also called survivor or second-to-die policies.   Nationwide has recently introduced “Nationwide YourLife  No-Lapse Guarantee SUL II”, and ING has introduced  “ING SUL-GDB”.    These are universal life policies with lifetime no-lapse guaranteed coverage.

I ran a quote for $1 million, age 65 at preferred plus for both male and female, and ING had the best rate.

Annual
Premium
Face
Amount
Product Carrier Features
$12,153 $1,000,000 Guaranteed SUL ING Lifetime Protection Fixed Rate

Continue reading “Survivorship Universal Life: New Products”

Survivorship Life Insurance: Only One Needs Their Health

I read a blog entry today by an estate planning attorney on survivorship Life insurance, also called second-to-die life insurance.  It’s a good way for husband and wife to settle their estate.   A life insurance benefit is paid out when the last surviving spouse passes away.   The last person standing, so to speak.  Your estate may be help up in probate.  Selling your house may take time.  Life insurance can provide liquidity during this period.

Coverage for a couple is available even if one of you is uninsurable because of cancer, heart disease, COPD, or whatever.  You get a lower price if you’re both insurable, but this is a key point: if at least one of you can get covered, both of you can obtain a life insurance policy.

They are not that expensive either, sort of two for the price of one.