Situation: We were looking at in force policies on some of our clients. They had about 60% of the value outstanding in a loan. The current policy was charging 8% interest.
Solution: We looked at rolling the loan plus cash into an IUL at 6% with Zurich. The loan would be at much better terms and on a fixed loan rate vs variable. We looked at the client just paying what the loan interest was charging him before (8% x $82,346). We were able to increase his death benefit substantially and provide a policy that wasn’t in jeopardy of lapsing.
This created a 26k target sale for the producer and put the client in a much better product given the substantial loan on the policy.
“Wait and See Design” – Prudential’s Skip Design
1. Clients have a substantial net worth and are concerned with committing an annual outlay of catch-up premiums.
2. Client wants to keep retained capital in other investments with much higher ROI. Business, Real Estate, Investments.
3. Client has some net worth now but will have a large inheritance once their parents die.
Lock in your insurability and insurance at current rates and health with a one-time lump sum premium. Show incremental catch up premiums to keep the policy in force to age 100 or 120. The IRR is typically better on the flex design to mid 90’s. If you looked at IRR on retained capital, it would significantly outperform the all pay design.