Client #4: Overpaying by 1,000%
The client, a 31 year-old male, owned a $102,000 current assumption universal life insurance policy that his father had purchased for him when he was 16.
$102,000 death benefit
$9,264 approximate cash value
$600 annual premium
Current Policy Findings:
Assuming the guaranteed maximum policy charges, guaranteed interest crediting rate and the current annual premium of $600, the policy is guaranteed to remain in-force through age 89.
Option 1: Keep Existing Insurance, Maintain Death Benefit and Extend Coverage Period – The client could keep his existing policy, increase his premium to $637 annually and guarantee the policy to last to age 95.
Option 2: Maintain Coverage, Reduce Premium and Extend Guarantee Period – The client could replace his existing policy, pay only $61 annually and guarantee his policy to age 100.
Option 3: Maintain Premium, Increase Death Benefit and Extend Guarantee Period – The client could replace his existing policy, pay the same premium of $600 annually, increase his death benefit to $267,486 and guarantee coverage to age 100.
The client chose Option 3. A $600 annual premium was not that much and to increase the death benefit from $102,000 to $267,486 seemed like a “no brainer” for the client.