Life Llc Pre Purchase Review Sample Presentation Website

04/13/2011

SAMPLE
All Names Removed And Information Modified To Maintain Confidentiality

Life Insurance - Pre-Purchase Review
For Mr. Sample

Kenneth W. Godfrey, CLU®, ChFC®, CFP®
President & CEO
Ken.Godfrey@LIFEInsReviews.com

Life Insurance Financial Evaluations, LLCTM
www.LIFEInsReviews.com
5113 3rd Street North
Arlington, VA 22203
(c) 704-315-8702
704- 315-

Preface & Disclosures
The material in this report is designed to provide accurate and authoritative information regarding the subject covered.
However, it is provided with the understanding that Life Insurance Financial Evaluations, LLCTM is not engaged in rendering
legal, tax, or accounting services. This communication is not a covered opinion as defined by Circular 230 and is limited to the
federal tax issues addressed herein. Additional issues may exist that affect the federal tax treatment of the transaction. The
communication is not intended or written to be used, and cannot be used, or relied on, by the taxpayer, to avoid federal tax
penalties. You should obtain the opinions of your attorneys and accountants on recommendations contained herein.

LC
s, L
This proposal is conceptual in nature with hypothetical insurance illustrations that may include variable life insurance. Details

L E
and information regarding investment objectives and a description of ati
alu
ontypes of securities in which each Series may invest
the
can be found in the appropriate Prospectus for the product ultimately selected and should be reviewed carefully. Variable life
ia l
Ev

P
insurance involves an investment risk, including the possible loss of value.
can
Fin
ce

M rn
Life Insurance Financial Evaluations, LLCTM is not aabroker or dealer or registered investment advisor and is not in the business
nsu
of selling any life insurance or securities products. Life Insurance Financial Evaluations, LLCTM is not liable for inaccurate
Lif
eI

A
information and any corresponding policy recommendations. Life Insurance Financial Evaluations, LLCTM recommends that the

S
policyowner(s) discuss the analysis with a licensed life insurance agent before making any policy decisions. Any insurance
purchase or policy management decisions and potential policy modifications will be made at the sole discretion of the
policyowner(s).

“Life Insurance Financial Evaluations” and the LIFE logo are trademarks of Life Insurance Financial Evaluations, LLC.

Confidential – For Client or Advisor Use Only © 2011 Life Insurance Financial Evaluations, LLCTM
2

Table of Contents
Introduction – Page 4

Life Insurance Education – Page 6

Insured Underwriting and Life Expectancy Evaluations – Page 13
LC
s, L
Policy Under Consideration – Page 19
Policy Details

L E al Ev
alu
ati
on

Performance Analysis
Carrier Information

Coverage Alternatives – Page 25 ife I
nsu
ran
ce

MP
Fin
anci

Term Insurance Alternative
L

S A
Guaranteed Universal Life Insurance Alternative
Cash Accumulation Insurance Alternative
Coverage Alternative Summary
Sample Pricing

Conclusions and Suitability Determination – Page 31

Appendix – Page 33
Additional Educational Information
Policy Reviewer Information

3

LC
s, L

Introduction
L E al Ev
alu
ati
on

MPI nsu
ran
ce
Fin
anci

A
e
Lif

S

4

Introduction
A life insurance purchase is a long term financial commitment and it is important to
purchase the right product type to meet the insurance needs. At Life Insurance
Financial Evaluations, LLCTM, we believe a second opinion is important when
considering a major life insurance purchase.

The purpose of this presentation is to provide a thorough and constructive evaluation of
LC
s, L
the life insurance policy from ABC Insurance nCompany under consideration for
purchase.

L E alua
tio
Ev
ial the insurance decision making process and should

MP
The report identifies key areas of considerationc in

eI
nsu
ran
ce
ina
n
provide the purchaser the knowledge to haveFa more informed interaction with the life insurance agent.

The report provides a variety of Lif

A
educational material and pertinent commentary regarding the proposed
life insurance carrier, product, pricing, policy design, and recommended future policy management.

S
The report provides a detailed financial analysis of the proposed insurance coverage and representative
coverage alternatives to ensure the desired purchase objectives are met.

Prior to finalizing the insurance purchase, our goal is for you to fully understand what
you are buying, to be committed to the long term nature of the decision, and to
understand the various tradeoffs and alternatives to feel assured you are making the
best decision for your individual and family needs.

In conclusion, we will make a suitability determination and categorize the proposed
policy in one of three categories: Suitable, Suitable w/ Reservations, and Not Suitable.
5

LC
s, L

Life Insurance Education
L
ia lEEv
alu
ati
on

ina
nc

MPI nsu
ran
ce
F

A
e
Lif

S

6

Life Insurance – Carrier and Product Considerations
A variety of factors come into play when considering the purchase of life insurance
coverage.

Insurance Carrier Considerations:
Insurance carrier financial strength
Underwriting decision LC
s, L
Carrier policy service capabilities
Availability of policy types
L E al Ev
alu
ati
on

Product Considerations:
Desired policy type eI
nsu
MP
ran
ce
Fin
anci

Amount of coverage
Duration of need
Lif

S A
Policy pricing – Estimated premium amount and duration
Estimated policy performance – (note: policy illustrations are hypothetical and based on current interest
rate environment or assumption of future market performance. Actual results may be more or less
favorable.)
Product features such as guarantee amounts and riders
Age determination (age nearest or age last) and backdating policy to save age
Modified Endowment Contract (MEC) status

7

Life Insurance – Overall Plan Costs
The required premiums associated with a life insurance purchase are usually only one
component of an overall financial plan.

Life insurance currently enjoys favorable tax and accounting treatment. Nevertheless, potential income,
estate, and gift tax liabilities should be considered when evaluating a life insurance purchase.
C
LL
s,the overall cost. For example, gift tax

irrevocable life insurance trust (ILIT).
L E
Factors such as planned policy ownership may impact
considerations may significantly impact the overallvalu
ia lE
ati
on
cost of purchasing life insurance owned by an

When taxes are a potential issue, sura
MP
In
n ce
Fin
anc

there may be plan design considerations (e.g., split dollar life

A
if e
insurance) that can reduce the overall financial costs of the transaction. These alternatives can be
L
sophisticated and should be discussed with your insurance agent and tax advisor.

S

8

Life Insurance – Replacements and 1035 Exchanges
If the new purchase will be implemented via a policy replacement or tax-free 1035
exchange, it is important to understand the rules and regulations of life insurance
replacements.

A policy replacement or tax-free 1035 exchange should only be considered if the transaction is in the best
interest of the customer and current objectives cannot be met by continuing or modifying existing
LC
,L
coverage and/or buying additional insurance. Over time, a scustomer’s insurance needs and objectives
may change for a variety of reasons.

L E al Ev
alu
ati
on

Section 1035 exchange is recommended.n

M
eI
P
It is very important that the insured(s) and Fina

nsu
ra
ce
nci
owner names are identical on the old and new policy if a

Lif

S A
Existing policy loans can complicate a 1035 exchange. Extreme care is recommended in these situations
to avoid unwanted taxation of cash surrender values.

9

Life Insurance – Ownership Structure
If a life insurance purchase is for estate planning purposes and the desire is for the
death proceeds to be received outside of the estate, certain steps should be taken to
avoid personal incidents of ownership in the policy.

An irrevocable trust (ILIT) is established for the benefit of heirs. The trust is a grantor trust for income tax
purposes, meaning any trust income is attributed and includableLC the grantor’s personal income tax
on
L
ns,

E
return.
uatio
val

L
of the policy, a “three year look back rule” on Fin
ce
an
E
The ILIT applies for life insurance coverage on theial of the grantor(s). Since the ILIT is the initial owner

P c life
transfer of assets is avoided for estate tax purposes.

Grantors contribute assets (cash Lif
or

AM
Ins
uran
eother assets) to the trust to finance the life insurance premiums.

S
Cash gifts to the trust may be subject to gift tax or may avoid a gift tax by using annual exclusions or
lifetime exemptions. Alternatively, the cash contributed may be structured as a loan or a sale of existing
assets. Another source of capital may be a transfer of existing cash value or convertible term life
insurance policies to the trust which may be replaced for new coverage.

To qualify for the annual exclusion, cash gifts should be “present interest“ gifts and should be held 30
days or longer. Each time a cash gift is made, the trustee notifies the trust beneficiaries of their
withdrawal power via a written Crummey notice letter.

10

An Important Note For Trustees
Uniform Prudent Investor Act (UPIA):

If a life insurance policy is owned by an irrevocable life insurance trust (ILIT), the trustee has an important
fiduciary responsibility to manage the policy for the benefit of the trust beneficiaries. Under the Uniform
Prudent Investor Act, ILIT trustees must establish and follow a prudent process for determining the
suitability of trust owned life insurance (TOLI) policies and managing the life insurance in response to
LC
changing market conditions. The Uniform Prudent Investor ActLwas adopted in 1992 and has been
s,
approved by most states.

L E al Ev
alu
ati
on

MP
Compliance with the Uniform Prudent InvestoraAct

sur
an ce
Fin
nci is determined by the trustee’s conduct in establishing and
following a prudent process. The process should focus on monitoring the life insurance, investigating the
suitability, and managing the life insurance to minimize and justify the expenses, while simultaneously maximizing
the rates of return relative to risk. I
n

S
L
Aif e

The prudent investor standard applies to fiduciaries ranging from the most sophisticated professional investment
management firms and corporate fiduciaries (e.g., bank trust departments) to family members with minimal
experience.

In 2009, the Cochran vs. KeyBank case highlighted the risks that trustees face when dealing with the
prudent management of TOLI. In this case, the trustee was sued by the beneficiaries of an ILIT for
violation of Indiana’s Uniform Prudent Investor Act and breach of trust.

Although KeyBank was the trustee and ultimately won the lawsuit, the case brings attention to the appropriate
protocols that should be followed when managing TOLI. The March 2, 2009 ruling by the Court of Appeals of
Indiana in the Cochran vs. KeyBank case highlights the importance of a trustee relying on guidance from “an
outside, independent entity with no policy to sell or any other financial stake in the outcome.”

11

Ongoing Policy Management
Due to a variety of factors such as interest crediting rate changes and varying policy
charges, a periodic policy review is essential to ensure the policy is performing as
expected and meeting your financial planning needs.

An underfunded life insurance policy is a policy that is not performing as well as
originally intended. There are significant risks that anLunderfunded policy will lapse or
C
expire worthless before the policy reaches maturity L(usually age 95 or 100) or before
s,

L E alu
on
death. This may result in a loss of coverage, cashtivalues, and premiums paid.
a
ia l
Ev

death benefit. There are a variety
maturity. Some reasons include:I nsu
ra
MP ina
nc
According to a 2006 Time magazine article, 88% of universal life policies never pay a
F
nceof reasons why insurance policies lapse before

A
e
Lif

S
Interest or dividend crediting rates lower than originally projected
Premiums paid less than originally planned
Premiums paid late
Premiums paid via policy loans for whole life policies
Policy surrenders, loans, or withdrawals of cash values
Insurance company charges higher than originally projected

An underfunded policy should be addressed and corrected immediately. As time goes
on, the problem becomes harder and more expensive to correct.

12

LC
s, L
Insured Underwriting and Life
Expectancy Evaluationsv
L E
c ia
lE
alu
ati
on

ina

MP
n

I nsu
ran
ce
F

A
e
Lif

S

13

Life Insurance - Underwriting
Perhaps the most misunderstood area of the insurance industry is the underwriting
process. Insurance carriers categorize individuals who desire insurance protection into
different classifications based on health and other factors.

No single factor impacts the acquisition cost of insurance coverage more than the underwriting
classification of the insured(s). LC
s, L

L E alu
ati
on
New insurance policies are issued with Evnumerous underwriting classifications.
al

P
longer than the average population. nce

M eI
nsu
ra
nci
Individuals who receive preferred underwriting classifications are expected to live
Fin
a

ALif
For existing policies, an insurance carrier may consider upgrading the underwriting

S
classification if the insured is willing to undergo new underwriting requirements.

Some of the issues an underwriter may consider include:

Age Family History Personal Habits

Medical History Vocation Travel

Financial Status Avocations

14

Insured Life Expectancy (LE) Evaluations
Although it is impossible to know the life expectancy of any one person, it is possible to
estimate life expectancy or probability of survival to a given age based on a large
number of individuals through actuarial tables.

Life expectancies may impact the duration of the life insurance coverage needed. Many
life insurance policies today can provide coverage toLLC 120 or later, even though the
age
ns,

L E
decrease the overall cost of the insurance. al Eva
l
tio
probability of living this long is very small. uaA shorter duration of coverage may

P
i
anc
Fin
ce

Lf
e

AM
The following pages detail the lifeanexpectancies of the insured(s) based on various
Ins
ur
insurance carrier underwriting iclassifications:

S
The underwriting classification for the policy under consideration:

Mr. Sample - Male Preferred Non-Smoker

15

Underwriting Classifications – Average LE
Although an insured may be classified at a particular underwriting class, their actual
health may be different than the insurance policy reflects.

The insured’s health may change after the policy is purchased.

C
The agent may have been able to secure a better underwritingLclassification at policy issue due to table
s, L

L E
shaving programs or agent’s status and relationship with theninsurance company.

ia lE
valua
tio

P
significant impact on estimated life rexpectancy.
Insu
Man
anc
The charts show that one’s overall health and underwriting classification can have a
ce
Fin

LAge

S A
ife 55 Male Non-Smoker
LE - Underwriting Classes
Class
Super Preferred
Avg. Years
27.7
Preferred 26.7
Standard 25.3
Table 1 23.4
Table 2 21.8
Table 3 20.6
Table 4 19.5

Life Expectancies based on the 2001 CSO Mortality Table.

16

Underwriting Classifications – Confidence Level
One of the biggest risks of owning life insurance is outliving the policy. To avoid
underpaying or overpaying, the policy can be actively managed to target a specific
duration with a high probability of success.

A life insurance policy designed or managed to have a duration estimated to meet the insured’s average
LC
or median life expectancy is very risky. An insured’s median life expectancy means that half (50%) of a
s, L

L E
population with similar characteristics will pass away by theodesignated age or time period.

al Ev
alu
ati
n

success.
MP
Insur
an ce
nci
Using an estimated life expectancy calculationawith a higher probability of success is more appropriate.
Fin
For instance, the policy can be designed or managed for a higher confidence level (e.g. 80% or 95%) of

underwriting classifications.
L

S A
if e
The charts show the estimated life expectancy of the insured based on various

Age 55 Male Non-Smoker
Confidence Level - Age of Mortality
Class 50% 80% 95%
Super Preferred 85 91 97
Preferred 83 91 96
Standard 82 89 95
Table 1 80 87 93
Table 2 78 86 91
Table 3 77 84 89
Table 4 76 83 88


17

Insured Life Expectancy Evaluations – Mr. Sample
Your Single Life Expectancy is:
26.7 years
Probability of Survival
This chart shows the probability of survival
at each age. The chart indicates that at 100%
least 9 out of 10 people who are Male
Preferred Nonsmoker age 55 will die before 80%
LC
s, L
age 94.
60%

40%

L E al Ev
alu
ati
on

P
Age 55 Male Non-Smoker
anci
Fin
His Age Prob. 20%
ce

M
70 86.0%
0% ran
nsu
75 76.1%

70

74

78

82

86

90

94

98

102

106

110
eI

A
80 61.6%
85 41.8% Lif
90
95
100
20.8%
6.4%
1.0% S
10%
Probability of Death in a Given Year

The chart shows the probability of death in a 8%
given year and illustrates that there is a very 6%
high degree of uncertainty regarding the
4%
actual year of death. The probability of
death is no greater than 4.3% in any given 2%
year. At least two thirds (2/3) of Male 0%
Preferred Nonsmoker age 55 insureds will
70

73

76

79

82

85

88

91

94

97

100

103

106

109
die between the ages of 71 and 92.
Age

18

LC
s, L

L
Policy Under Consideration E
ia l
Ev
alu
ati
on

ina
nc

MPI nsu
ran
ce
F

A
e
Lif

S

19

Policy Under Consideration – Policy Details
Insureds:
Mr. Sample – 01/01/1956 – Current Age 55

Insurance Carrier:
ABC Insurance Company
LC
s, L
Product Type:

L E al Ev
alu
ati
on

Guaranteed Universal Life

Policy Ownership:
MP
nsu
eI
ran
ce
Fin
anci

Lif
A
The policy is to be owned by the Sample Family Irrevocable Trust dated 01/01/2003

Policy Beneficiaries: S
Primary – Sample Family Irrevocable Trust dated 01/01/2003
Contingent – None listed

20

Policy Under Consideration – Policy Details
Death Benefits:
Policy Face Amount - $1,000,000
Death Benefit Option – Level

Policy Premiums:
Levels - $12,434 per year (premiums required for first five years) LC
s, L
Mode – Premiums to be payable annually

L E
Duration – Premiums illustrated to be payable for alll years
ia
Ev
alu
ati
on

Insur
an ce
Fin

MP
anc

Lif e

S A

The life insurance policy information included in this report is a supplemental life insurance illustration.
Please refer to the computer generated illustration for more information.

21

Policy Under Consideration - Performance Analysis
Guaranteed Universal Life
Policy Under Consideration
4.00% Crediting Rate

Policy Cash Surrender Non-Guaranteed IRR on Non-Guar. Guaranteed Death
His Age LE* Annual Premium Account Value Surrender Charges
Year Value Death Benefit Death Benefit Benefit*

1 56 $ (12,434) $ 6,910 $ 6,910 $ - $ 1,000,000 7942.5% $ 1,000,000
2 57 (12,434) 14,018 14,018 - 1,000,000 748.2% 1,000,000
3 58 (12,434) 21,138 21,138 - 1,000,000 293.6% 1,000,000
4 59 (12,434) 28,343 20,799 7,544 1,000,000 167.7% 1,000,000
5 60 (12,434) 35,662 16,399 19,263 1,000,000 112.8% 1,000,000
6 61 (12,434) 43,031 15,600 27,431 LC
1,000,000 82.9% 1,000,000
s, L1,000,000
11
16
21
66
71
76
(12,434)
(12,434)
(12,434)

L E 81,172
134,200
177,133 -
ia l
Ev
11,100
5,599
a
70,072 n

lua
tio
128,601
177,133
1,000,000
1,000,000
31.4%
17.3%
11.0%
1,000,000
1,000,000
1,000,000

P
26 81 (12,434) 183,962
27 82 (12,434) 175,637 nc - 183,962 1,000,000 7.6% 1,000,000

28 83 50% (12,434) 162,331 F ina -- 175,637
162,331
1,000,000
1,000,000
7.1%
6.6%
1,000,000
1,000,000
29 84 (12,434) 143,190 e
c - 143,190 1,000,000 6.2% 1,000,000
30
31
32
33
34
85
86
87
88
89
(12,434)
(12,434)
(12,434)
Lif
e
(12,434)
(12,434)

AMI
ran
116,810
nsu 81,721
35,637
-
-
-
-
-
-
-
116,810
81,721
35,637
-
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
5.8%
5.4%
5.1%
4.8%
4.5%
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
35
36
37
38
39
40
41
90
91
92
93
94
95
96
80%

95%
(12,434)
(12,434)
(12,434)
(12,434)
(12,434)
(12,434)
(12,434)
S -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
4.2%
4.0%
3.8%
3.5%
3.3%
3.1%
3.0%
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
46 101 (12,434) - - - 1,000,000 2.2% 1,000,000
51 106 (12,434) - - - 1,000,000 1.7% 1,000,000
56 111 (12,434) - - - 1,000,000 1.2% 1,000,000
61 116 (12,434) - - - 1,000,000 0.9% 1,000,000
66 121 (12,434) - - - 1,000,000 0.6% 1,000,000

TOTAL $ (820,644)

This illustration depicts elements of life insurance which are not guaranteed and is considered a supplemental illustration. Please refer to the NAIC Basic Illustration or the hypothetical compliant variable life
insurance illustration and prospectus which include information about the guaranteed elements of the illustrated policy. Actual policy performance may differ from this illustration.

Totals for “Annual Premium” columns equal to total potential scheduled premiums paid over life of policy.
* If premiums are paid as illustrated and on time and no withdrawals and/or loans are taken, the insurance carrier guarantees the death benefit will be in force for the life (lives) of the insured (insureds) or
specified period.
* LE = Life Expectancy based on the 2001 CSO Mortality Table. The percentages shown are the probability of survival at a given age. If the policy is inforce, the percentages can be used as a confidence level
that the policy will outlive the insured(s).

22

Policy Under Consideration - Performance Analysis
Performance Analysis and Policy Summary:

Duration - The illustration shows that the policy is designed assuming the current crediting rate of 4.0%
and the policy is projected to carry to policy age 121 on a non-guaranteed basis.

Guaranteed Values – The death benefit is guaranteed to age 121Cbased on guaranteed interest rates and
LL
charges. If premiums are paid as illustrated and on time and, no withdrawals and/or loans are taken, the

L E
insurance carrier guarantees the death benefit will be inforce for

ia lE
valua
tio
ns the specified period.

MP
For GUL products, higher increased uran
Ins
anc
Sensitivity of Interest Crediting Rates – Illustrations should be run at varying interest crediting rates to
show how the policy is expected to perform e Fi
n
c under different market conditions.
crediting rates will have some impact on cash value accumulation but little to
no impact on death benefit coverage amounts.

A
e
Lif

S
Surrender Charges – Surrender charges will be levied against the policy cash values if the policy is
surrendered or 1035 exchanged in the first 20 policy years.
Policies with surrender charges may provide a cheaper premium than alternatives without surrender charges.
However, surrender charges may limit the available options if policy changes are desired in the future.

Outstanding Loans – There are no policy loans illustrated. Policy loans create a negative drag on policy
performance and should be avoided if possible.

The policy is classified as a Non-MEC contract which provide favorable access to cash values.

23

Policy Under Consideration - Carrier Information
An insurance carrier’s financial strength and claims paying ability are very important
when purchasing life insurance.

For permanent life insurance policies, all cash surrender values allocated to the company’s general
account are subject to the credit risk of the insurance carrier.

LC
Death benefit proceeds are also subject to the claims paying s, L ability of the insurance carrier.

Financial Strength Ratings:
L E
al Ev
alu
ati
on

Ins
u
Fin
a

MP
nci
The Comdex is not a rating itself, but a composite of all the ratings that a company has received. The
ce
Comdex ranks the companies, on a scalenof 1 to 100, in relation to other companies that have been rated
ra
by the services. According to the eComdex, the insurance company ranks in the 94th percentile of all
insurance companies.

Lif

S A Ratings
A.M. Best Company (Best's Rating, 15 ratings) A+ (2)
Standard & Poor's (Financial Strength, 20 ratings) AA- (4)
Moody's (Financial Strength, 21 ratings) A1 (5)
Fitch Ratings (Financial Strength, 24 ratings) AA- (4)
Comdex (Percentile in Rated Companies) 94

NOTE: A company needs to be rated by at least two rating services to receive a Comdex. The Comdex is based on the ratings issued by the
following rating services: A.M. Best, Standard & Poor's, Moody's Investors Service and Fitch.

24

LC
s, L

L E
Coverage Alternativescial Ev
alu
ati
on

ina
n

MPI nsu
ran
ce
F

A
e
Lif

S

25

Term Insurance Alternative
About Term life insurance:

Term life insurance provides coverage for a fixed period of time. When the term period expires, the policy
either ends or coverage converts to annual renewable term (ART) insurance with increasing premiums.
ART rates can be cost prohibitive to continue the coverage.
LC
,L

E
When purchasing Term insurance, it is desirable to purchase scoverage for the maximum duration needed.
on
Although premiums increase with the duration, obtaininguthe ati proper duration of coverage can avoid
al

L
significant issues from lack of coverage later on. ial

P F ina
nc
Ev

nce insurance coverage requires going through new

L
eI
M
When the term period expires, obtainingrnew
nsu
a
underwriting and can become veryifexpensive (especially if there has been a decline in health status).

A
S
Some Term insurance policies offer conversion features to “permanent” products. There may be limits on
how long the policy is available to be converted and it is important to monitor when the conversion
privileges expire.

Term insurance may not be available to older individuals and the maximum period is usually 30 years.

Insurance carriers determine insurance age differently. Some use an age nearest calculation while
others use an attained age calculation. Backdating a Term insurance policy may result in lower pricing.

26

Guaranteed Universal Life (GUL) Insurance Alternative
About Guaranteed Universal Life insurance:

Guaranteed Universal Life insurance products are similar to Term insurance products in that they provide
guaranteed life insurance coverage for a specified duration. The policies usually have little to no cash
surrender values.
LC
s, L
If premiums are paid as illustrated and on time and no withdrawals and/or loans are taken, the insurance

L E al Ev
alu
ai
on
carrier guarantees the death benefit will be in force for the tlife of the insured or specified period.

M
eI
P
Since Term insurance may not be available fornolder

nsu
ran
ce
Fi
anci individuals or for the desired duration, Guaranteed
Universal Life insurance products offer unique alternatives.

Lif
A
Many GUL products offer coverage to age 120 or later. In addition, many GUL products allow you to

S
target the desired duration (e.g., age 90 or age 100).

Guaranteed Universal Life products are “permanent” products and offer increased flexibility. If the desired
duration changes over time, premiums can be increased or decreased to lengthen or shorten the
coverage duration without evidence of insurability. However, an increase in coverage amount involves
new underwriting requirements.

Survivorship or second-to-die policy options are available for Guaranteed Universal Life insurance
products.

27

Cash Accumulation Insurance Product Alternative
About Cash Accumulation life insurance:

Cash Accumulation life insurance products are “permanent” products and come in many flavors. Cash
Accumulation life insurance products are often referred to as Whole Life, Variable Life, or Equity Index
Life.
LC
s, L between guaranteed vs. non-

E
With these products, it is important to understand the differences
au
ati
on
guaranteed values and how interest credits will apply to laccount values. Account values can be allocated

L l Ev
to the insurance carrier general account, insuranceasub-accounts that operate similar to mutual funds, or

MP
equity index options that trade some upside growth

suran
ce
Fin
anci potential for downside market protection.

Many Cash Accumulation productsfe In some level of guaranteed life insurance coverage for a specified
offer
Li
A
duration if premiums are paid as illustrated and on time and no withdrawals and/or loans are taken.

S
Cash Accumulation products offer an increased risk/reward for planned premiums. If policy performance
is better than expected, future premium requirements to maintain the policy may be minimized.
Conversely, if policy performance is not as expected, higher premiums may be required to maintain the
policy.

Cash Accumulation products require a higher commitment level on behalf of the policyholder to actively
manage the policy (e.g., account allocation for Variable Life insurance) and policy performance should be
periodically reviewed.

Survivorship or second-to-die policy options are available for Cash Accumulation life insurance products.

28

Coverage Alternative Summary
Summary

For as long as the coverage is needed, a life insurance purchaser should commit to paying the scheduled
premium amounts each and every year. Otherwise, the purchaser risks the policy lapsing and ultimately
wasting their money.
The insurance contemplated includes premium payments in all Cpolicy years and well past normal retirement
L some people.
s L
ages. Shorter premium durations may be more appropriate, for

L E
Term insurance products offer the cheapest premiums al
alu
ati
on
Ev but the coverage is for a limited duration. A 30

and outlive the coverage.
MP
year Term insurance product provides coverage until
ce
Fin
anci age 85.
Based on preferred nonsmoker underwriting, there is a 58% probability that Mr. Sample will be alive at age 85

eI
nsu
ran
Lif

S A
Guaranteed Universal Life insurance products are more flexible than Term Insurance and offer the ability
to specify the desired duration and make adjustments over time.
For Guaranteed Universal Life insurance products, it is important to determine the appropriate policy duration
while considering life expectancy calculations and design the policy accordingly.

Cash Accumulation insurance products may be more appropriate than term insurance or GUL depending
on the purpose of the insurance, risk tolerance of purchaser, and policy management commitment level.

Diversifying insurance carriers, product types, and product duration via policy stacking (i.e., the purchase
of multiple policies) may provide a more balanced insurance portfolio and increase flexibility for future
unforeseen cash flow limitations.

29

Sample Pricing – Mr. Sample
Below are representative Term life insurance products and pricing.

Sample Term Insurance Products
Carrier Product Comdex Term Underwriting Class Annual Premium
1 Banner Life OPTerm 30 93 30 Preferred Non-Tobacco $ 6,515.00
2 Transamerica Life Trendsetter Super 94 30 Preferred Nonsmoker $ 6,670.00
3 Genworth Life Colony Term UL 79 30 Preferred No Nicotine Use $ 6,967.00
4 American General AG Select-A-Term 84 30 LC
Preferred Nontobacco $ 7,324.00
s, L

E
5 Pruco Life Ins Co (Prudential) Term Essential 30 89 30
6 ING Reliastar ING TermSmart 30 79 30 uati
onPreferred Non-Tobacco
Preferred Nonsmoker
$
$
7,455.00
7,498.00
vl
7
8
9
Protective Life
West Coast Life
Aviva Life and Annuity
Average
Protective Secure-T
Secure T
30 Year Term

PL c e
87
87
86 a
Fin
86.4
nci
al
30a
E
30
30
Preferred
Preferred Nontobacco
Preferred Non Tobacco
$
$
$
$
8,630.00
8,630.00
8,775.00
7,607.11

eI

AMnsu
ran
Below are representative Guaranteed Universal Life insurance products and pricing.
Lif

1
2
3
Carrier
American General
Genworth Life
Banner Life
Product
ContinUL
GenGuard UL
Life Choice UL
S
Sample Guaranteed Universal Life Products
Comdex Age
84
79
93
Underwriting Class
100
105
100
Preferred Nontobacco
Preferred No Nicotine Use
Preferred Non-Tobacco
Annual Premium
$
$
$
10,730.00
11,560.00
11,598.00
4 MetLife Investors Guarantee Advantage UL 95 ? Preferred Plus Nonsmoker $ 11,700.00
5 Aviva Life and Annuity Advantage Builder 86 ? Preferred Non-Tobacco $ 11,710.00
6 Banner Life Life Choice UL 93 121 Preferred Non-Tobacco $ 11,736.00
7 American General ContinUL 84 121 Preferred Nontobacco $ 11,810.00
8 Lincoln National Life LifeGuaranteed UL 89 ? Preferred Non-Smoker $ 11,851.00
9 Protective Life Centennial G II UL 87 ? Preferred $ 11,900.00
10 West Coast Life WCL LifeTime Platimum III 87 ? Preferred Nontobacco $ 11,900.00
Average 87.7 $ 11,649.50

Premium pricing subject to change and insured must meet underwriting requirements. Requirements may differ for each carrier. Sample pricing is for illustrative purposes only and does not
include all eligible carriers and products. Actual writing carrier may be a subsidiary of parent company. Please contact a licensed insurance agent for details.

30

Life Llc Pre Purchase Review Sample Presentation Website

Life Llc Pre Purchase Review Sample Presentation Website

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Similar a Life Llc Pre Purchase Review Sample Presentation Website

Similar a Life Llc Pre Purchase Review Sample Presentation Website (20)

Life Llc Pre Purchase Review Sample Presentation Website