The Importance Of A Life Insurance Policy Review
Everyone who owns an insurance policy should be certain to conduct insurance reviews. A recent study found that in 75% of cases, the person insured could have reduced their premium outlay by an average of 40%, or increased their coverage by an average of 40% for the same outlay.
These changes occur because insurance policies have evolved over time. Mortality rates have improved, people are living longer, and since insurance companies are going to pay claims later, newer policies will be cheaper than older policies even though the people insured are older.
Underwriting is also different than in the past. Even for people with health impairments, insurance companies will pay later because of improved health and longevity, so that they can charge less.
A financial bonanza? Why: Ninety percent of the time when an old policy is replaced with a new policy, the client winds up with a significant increased death benefit… but no increase in out-of-pocket cash for premiums.
Every dollar of those death benefits is tax free.
No income tax. No estate tax.
The best way to understand how the strategy works is to look at some real-life examples.
Example 1. Joe (age 82) and his wife Mary (84) had a 45-year old policy on Joe with a death benefit of $396,000, and a cash surrender value (CSV) of $355,000. Joe stopped paying premiums many years ago. We used the $355,000 CSV to purchase a second-to-die policy (on Joe and Mary) with a $706,000 death benefit. That’s a 78 percent increase over the original $396,000 death benefit and, as is typical, not one cent of out-of-pocket cost to Joe.
Example 2. Larry (age 58 and single) had a 15-year old policy on his life: death benefit of $788,631 and CSV of $239,027. Larry paid a $9,000 premium annually. This time we exchanged the old policy for a new policy with a $1,702,127 death benefit (a 116 percent increase). The $9,000 annual premium continued. Larry said, “WOW!”
Example 3. Mildred, a young 71-year-old widow, owned a 26-year old policy: $10 million death benefit, $2,880,000 CSV. Mildred’s premium was $68,000 per year, but because the CSV was large enough to self-carry the policy, her intent was to pay no more premiums out-of-pocket (instead borrowing against the CSV). We pulled another rabbit out of the hat: we traded Mildred’s old policy (tax-free) for a new one with a $12,670,000 death benefit, guaranteed, no further premium payments by Mildred.
Okay, so you are wondering if you can join the tax-free, wealth-building fun like Joe, Larry and Mildred. Actually, it’s easy to join. Just see if you meet the following four requirements:
- 45 years old or older.
- The policy/policies are about 10 years old or older
- CSV of about $35,000 or more. (Sorry, term policies cannot get in the game).
- Your clients are healthy for their age (If married, at least one of them is healthy… best if both are healthy)
Positively, Herb Williams Mobile/Text: (813) 344-6547 e-mail: firstname.lastname@example.org web: http://hrwfinancial.com Get Your FREE Policy Review today: