Which type of life insurance is good for estate planning, 2nd to die, UL, VUL or whole life ?
Total Comments: 3
Posted: Wed Apr 11, 2012 07:59 pm Post Subject:
Each situation is different, so there is no single answer to your question. All of the policies you mention can be used, but, personally, I would never recommend VUL. Far too complex and risky if the objective is to leave a specific amount of money for taxation matters.
Whole life is the most straighforward product for this. You determine your need, obtain that amount of insurance, and pay the premium from now until the second death, or if you have the financial means, pay a single or limited pay (10- or 20- years perhaps) premium. To protect against the possibility of increasing tax liability beyond the initial face amount of insurance, you would want to add a guaranteed purchase option rider to the contract (or something similar, such as a cost of living rider, or a guaranteed increase rider -- +5% per year, for example).
Guaranteed UL products offer a possible alternative. Potentially lower premiums and a guaranteed death benefit in exchange for your understanding that there will never be much, if any, available cash value at any time in the contract. It will also require payment of premiums from now until the second death -- miss just one payment and the guarantees could be lost. The other problem you may encounter is if that second death occurs beyond the initial guarantee period, it could cause the premiums to increase significantly, possibly increasing every year, risking the loss of the insurance through nonpayment of premiums at the time it is most likely going to be needed.
And estate planning policies are not small face amounts, so those increasing premiums could be HUGE. Even to the point of five- and six-figure premiums PER MONTH. That can all be avoided with whole life.
You have to understand that this is the insurance companies' game. They make the rules. You can usually get what you need, but you cannot always get it the way you want it. The state laws that regulate insurance serve only to keep the playing field level and the insurance companies from taking unfair advantage of people. The rest, people often do to themselves.
Posted: Tue Apr 17, 2012 11:30 am Post Subject:
Whole life and second-to-die insurance usually are the best options when using life insurance for estate planning purposes. Sometimes, term life insurance is also used, especially when the death benefit is needed only to pay off estate taxes. UL and VUL are better used for retirement purposes. You could check out [Link removed by Moderator MaxHerr per TOU] free life insurance quotes at reduced rates on almost all of these types of insurance online at [Link removed per TOU].
Pat Cassidy
Disclaimer: I work for [Link removed per TOU] and this is my personal opinion.
Posted: Wed Apr 18, 2012 07:28 pm Post Subject:
Pat Cassidy, you might want to gain some insurance knowledge because your posts make your company look bad.
Posted: Wed Apr 11, 2012 07:59 pm Post Subject:
Each situation is different, so there is no single answer to your question. All of the policies you mention can be used, but, personally, I would never recommend VUL. Far too complex and risky if the objective is to leave a specific amount of money for taxation matters.
Whole life is the most straighforward product for this. You determine your need, obtain that amount of insurance, and pay the premium from now until the second death, or if you have the financial means, pay a single or limited pay (10- or 20- years perhaps) premium. To protect against the possibility of increasing tax liability beyond the initial face amount of insurance, you would want to add a guaranteed purchase option rider to the contract (or something similar, such as a cost of living rider, or a guaranteed increase rider -- +5% per year, for example).
Guaranteed UL products offer a possible alternative. Potentially lower premiums and a guaranteed death benefit in exchange for your understanding that there will never be much, if any, available cash value at any time in the contract. It will also require payment of premiums from now until the second death -- miss just one payment and the guarantees could be lost. The other problem you may encounter is if that second death occurs beyond the initial guarantee period, it could cause the premiums to increase significantly, possibly increasing every year, risking the loss of the insurance through nonpayment of premiums at the time it is most likely going to be needed.
And estate planning policies are not small face amounts, so those increasing premiums could be HUGE. Even to the point of five- and six-figure premiums PER MONTH. That can all be avoided with whole life.
You have to understand that this is the insurance companies' game. They make the rules. You can usually get what you need, but you cannot always get it the way you want it. The state laws that regulate insurance serve only to keep the playing field level and the insurance companies from taking unfair advantage of people. The rest, people often do to themselves.
Posted: Tue Apr 17, 2012 11:30 am Post Subject:
Whole life and second-to-die insurance usually are the best options when using life insurance for estate planning purposes. Sometimes, term life insurance is also used, especially when the death benefit is needed only to pay off estate taxes. UL and VUL are better used for retirement purposes. You could check out [Link removed by Moderator MaxHerr per TOU] free life insurance quotes at reduced rates on almost all of these types of insurance online at [Link removed per TOU].
Pat Cassidy
Disclaimer: I work for [Link removed per TOU] and this is my personal opinion.
Posted: Wed Apr 18, 2012 07:28 pm Post Subject:
Pat Cassidy, you might want to gain some insurance knowledge because your posts make your company look bad.
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