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Case Study – Policy Review

OVERVIEW
  • Male / Age 40 / Good health
  • Desire to stop paying premiums at age 65
  • Concerned with decreasing dividends since initial purchase of whole life policy
  • Does not need cash value – looking to maximize death benefit to include lifetime guarantees

Current policy

  • Participating Whole Life
  • Death Benefit: $4,569,332
  • Premium: $47,051 – full pay
  • Surrender Value: $432,000
ASSESSMENT / APPROACH

Assess and identify products to meet the client’s desire to increase the death benefit with a guarantee for life. 

New Opportunity client:

  • 1035 & $47,050 to age 65 to PRU VUL Protector with Opt I DB CVAT $8,677,488 guaranteed for life.
  • 1035 & $47,050 for Life to PRU VUL Protector with Opt I DB CVAT $9,591,321 guaranteed for Life – if he wanted to continue premium payments this is an option for increase guaranteed DB and future growth
RECOMMENDATION

Exchange the current value of the policy into a variable universal life policy:

  • Lifetime no-lapse guarantee
  • Pay same premium of $47,050 for life
  • The level guaranteed death benefit is $9,591,321
  • Based on a hypothetical Annual Gross Return of 7.00%, the net death benefit at age 80 is $10,232,776 and $17,467,080 by age 90.
RESULT
  • $4.1M additional death benefit
  • Death Benefit is based on guarantees not the dividend performance
  • Premiums are invested in market for long term growth potential with underlying DB guarantees for LIFE
  • Cash Value growth can increase death benefit, $17.5M at age 90 (assumes 7.0% Gross return )
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