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Forgotten Asset Class
Types of Life InsuranceTermWhole LifeVariable LifeIndexed Life – Indices like the S&P 500.
Participate in gains but if index has a negative performance (like 2008) policy is credited at 0%.
Survivorship Life – Estate PlanningUniversal Life
Guaranteed No-Lapse UL (“lifetime term”)Guaranteed Premium & DB to age 121.
Life Insurance BenefitsFLEXIBILITY – Ability to adjust premiums and
DB’s.Valuable riders such as Guaranteed future
purchase options and Long term care benefits.UNLIMITED protection of cash values from
lawsuits or judgments (ARIZONA)Cash Values can be accessed TAX-FREE via
withdrawals & loansMany new Policies have “wash” or 0% net loansGains can avoid ANY taxation unless you let policy lapse.No penalty taxes for early withdrawal.Free of federal income, capital gains, AMT, state and
income doesn’t trigger taxation of Soc. Security benefits.
Reasons for a Policy ReviewMore Competitive Product PricingMany newer policies have better GuaranteesOlder policies needed interest rates to
remain much higher than current rates to stay in-force – High incidence of Lapses.
Independent review of trust – owned policies showed 86% could be improved with a policy review.
Improved Life Expectancy* – Lower Insurance (Mortality Costs)40 Yr. old Male in 1975 – 68.8 yrs. LE40 Yr. old Male in 2006 – 75.2 yrs. LE
*Source: National Cernter for Health Statistics
Consumer – Friendly Enhancements
Trends in Life InsuranceTerm Insurance
Return of Premium TermStretch DB payout to beneficiaries rather than
lump sum = helps to reduce premium cost
EXAMPLE: 50 Yr. Old Male (Preferred N/T)20 yr. level @ $500K = $1,28520 yr. level - Payout $33,333 @ 15 yrs. =
$919.72 (28% Lower Premium)
Trends in Life Insurance (pg. 2)Cash Value Insurance Enhancements
New popular policies are issued WITHOUT surrender charges. Available on UL/VUL/IUL (Index Life) chassis.
Index Life offers upside participation while providing downside protection using popular stock indices like the S&P 500, Hang Seng, Euro Stoxx 50 & World Index.
Participate in Index Gains with a CAP but NOT Losses. 100% Participation in the S&P 500 index up to a 16% Cap 140% Participation in the S&P 500 index up to a 14% Cap Advantage of a Lookback – 75% into best performing index, 25% in next best
performing index & 0% in the worst performing index.
MUCH higher early cash values and in some cases, the 1st yr. surrender values => premium.
Example*: 35 Yr. Old Male Excellent Health $1M DB ($27,500 Prem. @ 8 yrs.)
** Old Style – Yr. 1 SURRENDER Value = $3,833 -- Yr. 10 Projected Surrender Value = $323,850
** New-Style – Yr. 1 SURRENDER Value = $27,500-- Yr. 10 Projected Surrender Value = $320,210* MN Life Eclipse IUL with @ without SVEA Rider
Trends in Life Insurance (pg. 3)LONG TERM CARE riders
Popular for insured who doesn’t like to pay premiums and not receive any benefits.
Tax-Free Death Benefits & Long Term Care Benefits90% Mortality Underwriting – possibly a little easier to
qualify for some Life + LTC plans.Tax-Free 1035 exchange from existing life policy.
Example: 60 Yr. Old Female Good Health ($50K Single Prem.)- Guaranteed Death Benefit of $101,481- Guaranteed Return of Premium after 3 yrs.- Guaranteed Cash Value - $65,497 @ age 80.- Guaranteed LTC pool of $$ = $304,443 ($4,228 mo.
benefit payable @ 72 months)► LTC $$ available for Home Health, Assisted
Living and Nursing Home.
LTC – Facts concerning WomenWomen have a 10X chance of reaching age
85 than a man. (1) Women need care longer than a man
3.7 yrs. versus 2.2 yrs. (2)
Women who live past age 65 50% greater chance of entering a nursing
home than a man & (3)
Are TWICE as likely to live alone. (1)
(1) American Association for Long Term Care Insurance (AALTCI) 2009(2) National Clearing House for LTC Information, US Dept of Health & Human
Services, 11/14/2007(3) AHIP (America’s Health Insurance Plans Aug. 2007)