We have seen a number of permanent life insurance policies providing the insured with a guaranteed return of premium option at various points within the contract. However, the caveat is that if your client would like all of their paid premiums back, they would have to surrender their coverage entirely.
Wouldn’t you rather show your clients a way that they can take their premiums back and still maintain life insurance coverage for the rest of their life?
Using an Index UL (IUL) solution, you could create the following proposal:
- Male – Age 40 – Standard Non-Smoker
- $500/Month Premium Payable for 30 Years to Age 70
- Solve for Minimum DB (initial DB is $160K)
- 5.79% assumed interest crediting rate
At policy year 31, you could show a withdrawal of $180,000 ($6,000 Annualized Premium x 30 Years = $180,000 Paid Premium) which would be a tax-free distribution to the client.
After taking the $180,000 policy distribution, the coverage still carries through age 121+ at the midpoint crediting rate of 3.75%. At age 87, the coverage projects to have a death benefit that is between $197K (using the 3.75% assumption) and $590K (using the 5.79% assumption).
The clients have taken back their entire out of pocket cost – which could help supplement their retirement income and maintain the benefit of on-going coverage without any additional planned premium contributions.
If you have clients who are a match for this sales strategy, or for additional information, contact your dedicated Life Sales Manager.