by Guest » Sat Feb 19, 2011 11:13 pm
Mr. Herr,
Thank you in advance for taking the time to answer my question. I read with interest your posts at the end of the thread, "Why Did I get a 1090R". My dad gave me permission to talk to the insurance company representative.
My dad put $500,000 into a universal life insurance policy. The death benefit is around $1,400,000. I noticed that the cash value decreases every year. He is 70 and has no health problems. He even runs me ragged on the tennis court.
By the time that he is 81, the surrender value is projected to be zero. I asked my dad about this and he didn't seem overly concerned. He said that he doesn't care about cash. He just wants to leave the life insurance for me. I was under the impression if a policy doesn't have any money, more premiums have to be paid. I was a life insurance selling failure after about 3 months, but this was 15 years ago.
When I spoke to the agent, he didn’t really want to talk to me. He said my dad was right that the cash didn’t matter. The policy would pay a death claim as soon as my dad died and it would be the same regardless of how much or little cash was in the policy at the time even if it was $0. This doesn’t sound right to me. Is it possible that he is telling the truth?
No offense is intended to anyone on this board, but I’d like to hear Mr. Herr’s response because he seems to be the one who understands the best.
Thank you in advance for taking the time to answer my question. I read with interest your posts at the end of the thread, "Why Did I get a 1090R". My dad gave me permission to talk to the insurance company representative.
My dad put $500,000 into a universal life insurance policy. The death benefit is around $1,400,000. I noticed that the cash value decreases every year. He is 70 and has no health problems. He even runs me ragged on the tennis court.
By the time that he is 81, the surrender value is projected to be zero. I asked my dad about this and he didn't seem overly concerned. He said that he doesn't care about cash. He just wants to leave the life insurance for me. I was under the impression if a policy doesn't have any money, more premiums have to be paid. I was a life insurance selling failure after about 3 months, but this was 15 years ago.
When I spoke to the agent, he didn’t really want to talk to me. He said my dad was right that the cash didn’t matter. The policy would pay a death claim as soon as my dad died and it would be the same regardless of how much or little cash was in the policy at the time even if it was $0. This doesn’t sound right to me. Is it possible that he is telling the truth?
No offense is intended to anyone on this board, but I’d like to hear Mr. Herr’s response because he seems to be the one who understands the best.
Posted: Tue Mar 01, 2011 07:25 pm Post Subject:
The Aviva number is wrong too. Even at standard rates it would be $489k for the Advantage Builder product ($518k for Guarantee UL II), just a few dollars away from $700k. Preferred Plus would be $370-400k depending on company. Just saying.
Posted: Tue Mar 01, 2011 07:35 pm Post Subject:
It illustrates with a minimum premium of $54,350, which would have to be paid every year for most of 48 years, or a total of $2,565,882 if the insured lives to the ripe old age of 121 (no premiums due after age 113 or 114). Non-guaranteed CV at age 121 is just under $699,000 at the current 4.75%. No CV by age 85 under the guaranteed column. Not so hot for someone who only wants to pay a minimum premium.
Ok, let's beat the pants off of this.
Instead of paying $54,350, pay $31,798. On a GUARANTEED basis, no premiums will be paid after age 85. Coverage will last to 121.
What if he wants to pay $54,350 until he's 85? On a GUARANTEED basis he can have $2,400,000 until age 121.
By the way, these quotes come from a company that has higher ratings from all rating services than Aviva and is not the company that has the lowest price.
So, Max, go ahead and use your expertise to properly explain to us why $54,000 paid for life for $1,400,00 is better than $54,000 paid for 20 years for $2,400,000.
Posted: Tue Mar 01, 2011 07:37 pm Post Subject:
Max, you owe it to yourself, your clients, your students, and this board to understand this stuff better.
Thanks, dgoldenz, I didn't bother looking at the Aviva rates, but they sure sounded absurdly high.
Posted: Wed Mar 02, 2011 03:15 am Post Subject:
Sorry Max,
But I have to side with the others on this and suggest it's entirely possible you don't really understand what we are talking about here. It's very common place to use an SGUL with a lump sum premium to endow the contact and guarantee the db to whatever age you choose.
If this is the case, it means the insured paid c. 500k to ensure a db of 1.4mill. The only question I would have is how long?
All of your disucssion about premiums paid for x years and CSV's and db's at certain ages is completely immaterial as it does not address anything that we've been discussing.
Also, please do not make juxtapositions to insinuate unethical behavior or one advocating or approval of such behavior. You comments about who bears the responbility followed by your personal musing on what you view as your responsibilities is also immaterial. We are trying to guide an individual and educate them to assess a decision a loved one made and determine whether or not it was a proper decision. A little more factual information and bit less gratuitous airing of your personal opinions would serve us all well.
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