Why do I want to offer single premium whole life insurance to my clients?Article added by Charles McGruder on November 14, 2011
cemcgruder

Charles McGruder

Lancaster, CA

Joined: February 23, 2010

Your clients use savings accounts and investment tools such as certificates of deposit, money markets, annuities, and mutual funds to provide for their family and save for retirement. What are the benefits of transferring some of these assets to a single premium whole life insurance policy?

Your clients work hard to provide for their family and save for retirement. They use savings accounts and investment tools such as certificates of deposit, money markets, annuities and mutual funds to accomplish these goals. But taxes and probate fees may shrink their estate.

By transferring some of these assets to a single premium whole life insurance policy, you could:
  • Instantly increase your clients estate.

  • Transfer money more efficiently to heirs.

  • The policy owner will still have control and access to growing cash value for emergencies, opportunities or monthly care expenses through living benefits.
The minimum death benefit is guaranteed from day one, regardless of changes in age or health. Also, the death benefit can increase over time as the cash value inside the policy may increase. Death benefits to a named beneficiary are generally probate-free (subject to state approval).

Usually, a lifetime guaranteed interest rate of 2 percent or higher can eliminate the worry of market volatility, plus the policy has future interest upside potential.

Some single premium whole life policies offer bonuses applied day one, day one return of premium less cancellation of bonuses applied, accelerated benefit insurance riders, and after the policy has been in force for 12 months or more, you can access the policy's death benefit in two ways:
  • Terminal condition benefit: A terminal condition can be devastating for you and your family. If your client developes a terminal condition, as defined by the policy, they may withdraw the lesser of up to $250,000 or more in an amount equal to the death benefit amount less usually $25,000. Terminal condition, as used in this rider, means an imminent death is expected in 12 months or less. Check the policy for details.

  • Chronic illness benefit: This benefit will also cover a chronic illness. Chronic illness, as used in this rider, means that the insured has been certified by a licensed physician within the last 30 days as being unable to perform, without substantial assistance from another individual, at least two activities of daily living (ADLs) for a period that is expected to last at least 90 days due to a loss of functional capacity. The benefit amount will be paid out in 33 equal monthly installments. The average stay in a convalescing center is about 29 months.
There are a large number of single premium whole life policies that include these benefits at no additional cost. Only one type of accelerated benefit will be allowed. Benefit payment cannot be made based on terminal condition and a chronic illness. We should always check the policy for details, rider limitations and exclusions.

Some policies offer initial death benefit that will be determined by the applicant's age and gender (review your state requirements). We suggest that you review the guidelines of your state. This information is provided for you as a alternative to single purpose long term care policies. I am providing information that is based on current approval in my state of California; your state may have different requirements. We suggest that you review policies with a qualified tax attorney, accountant or tax advisor. The information provided adds another tool in your tool box.

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