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Permanent Life blog
Divorcing after fifty: what happens to policies bought during the marriageHow a late-life divorce treats long-held term and permanent policies: ownership, cash value, beneficiary changes, shorter horizons and replacing coverage later.Two single policies or one joint policy for a coupleTwo single term policies, a first-to-die joint policy and a second-to-die joint policy compared on cost, survivor cover, divorce and flexibility.Mutual or stock insurer: what ownership means for a policyholderOwnership, profit, dividends, voting and demutualization side by side, with an honest account of what the form does and does not predict about you.Keep, reduce, convert or surrender: deciding about an old whole life policyA decision list for an aging whole life policy: the numbers to gather first, what each path does to coverage, cash and taxes, and when to get professional help.Stress-testing an IUL illustration with lower assumed ratesA worksheet that reruns a hypothetical indexed universal life ledger at lower crediting rates and higher costs, with every step shown so you can repeat it.Term plus savings vs cash value life on the same monthly budgetOne illustrative household and $400 a month, two paths: term plus savings or whole life. Death benefit, liquidity, fees, taxes and discipline compared.A whole life illustration walked through column by columnA hypothetical whole life ledger read from premium to guaranteed cash value, dividends and paid-up additions, with what each column means and what to ask.An annual whole life statement read line by lineA made-up annual statement for a participating whole life policy, read line by line, with the arithmetic that ties it together and the entries worth a call.Blending term and whole life in one household plan: design options comparedThree designs for a hypothetical couple, all term, all whole life and term over a small permanent base, compared by coverage per decade, cost and flexibility.Buy term and invest the difference: a worksheet for your own numbersA step-by-step worksheet with a worked example to test buy-term-and-invest against whole life using your premiums, a return range, taxes and missed deposits.Why heirs do not get the cash value on top of the death benefitQuestions and answers on what happens to whole life cash value at death, how loans and paid-up additions change the net payout, and why the two never stack.Converting term to permanent at 58: a decision walkthroughA hypothetical 58-year-old faces a conversion deadline: premium shapes, credits, partial conversion, and a decision list for converting, buying new or stopping.Direct and non-direct recognition loans: how borrowing affects dividendsHow a whole life insurer may adjust dividends on borrowed cash value, why the two designs differ, and what to ask about how loaned values are treated.How a whole life dividend travels from company earnings to your statementA timeline of a participating dividend: year-long results, the actuary's review, board declaration, the scale, the anniversary credit and your election.Paying whole life premiums with dividends: mistakes that bring bills backSeven errors when dividends offset whole life premiums, from starting too early to borrowing against the policy, with what each costs and how to avoid it.Choosing a dividend option: a worksheet to run with your own policyA fill-in worksheet for comparing cash, premium offset, paid-up additions, accumulation and loan repayment, with a worked example in round illustrative numbers.How dividends, premiums and basis interact for tax: a worked exampleA hypothetical participating policy traced over decades to show how premiums, cash dividends, withdrawals and loans move cost basis, with the arithmetic shown.Equalizing an inheritance between children with a permanent policyFour hypothetical families where one child inherits a farm or business and a permanent policy evens things out, with the arithmetic, ownership and pitfalls.An infinite banking break-even worksheet using your own numbersA step-by-step worksheet to compare premiums, cash value, loan interest and the growth you give up, with a worked example and blanks for your own policy ledger.Infinite banking claims weighed fairly, one assertion at a timeSix common infinite banking claims tested against how whole life loans, dividends and taxes work, with credit where it is due and limits stated plainly.You inherited a whole life policy you did not buy: what to do nextAn order of operations for a new policy owner: confirm ownership, request an in-force statement, check loans and lapse risk, then keep, surrender or transfer.Handing a juvenile whole life policy to your child at adulthoodWhat a parent or grandparent does when a child's whole life policy reaches adulthood: transfer, premiums, cash value, riders and keep-or-surrender choices.Keep or drop a permanent policy once the children are independentHow to decide about a whole life policy after the children are grown: which needs remain, the yearly cost of keeping it, the exits and a decision list.Paid-up additions in four households: who benefits and who does notFour hypothetical households test a paid-up additions rider against its cost: a lower death benefit per dollar in exchange for faster cash value.Participating whole life myths: dividends, guarantees and ownershipSeven common claims about dividend-paying whole life, tested one at a time against what the contract, the illustration and the tax rules actually say.Permanent life insurance for a family with a special-needs childFour hypothetical households show when lifetime coverage fits a child with a disability, how a special needs trust beneficiary works, and what to ask a lawyer.Permanent insurance for single people with no dependents: claims testedSix reasons given for a single person to buy whole life, tested against how the contract works, plus a rule for telling a real reason from a sales one.Permanent insurance on a stay-at-home parent: claims testedSix claims about whole life for a parent who is home with the kids, checked against replacement costs, Social Security and the contract, with worked numbers.Survivorship life insurance and how it pays at the second deathWhy a policy on two lives costs less than two single policies, how it is underwritten and paid, and what happens at the first death, a divorce or a tax change.A ten-pay whole life policy for a household planning twenty years outFollows a hypothetical 40-year-old through ten-pay premiums, the paid-up date, twenty years of cash value, and the choices open if income drops in year six.Buying whole life at 55: a decision walkthrough for late startersCriteria for a first permanent policy in your mid-50s: lifelong need, premium load, health class, term conversion as the alternative, and a decision list.What to do when your whole life dividend scale is loweredSteps after a statement shows a smaller dividend than the illustration: read the notice, compare columns, test premium offsets and additions, then decide.What happens inside a whole life policy during its first ten yearsA year-by-year look at why early cash value trails premiums, when dividends begin, when guaranteed value passes premiums paid, and what statements show.Whole life next to bonds and savings accounts: a fair comparisonWhole life, bonds and savings accounts compared on liquidity, guarantees, tax and purpose, with no return claims and a note on the insurance component.A yearly review routine for a permanent policyA checklist with reasons for each item: what to request, how to check values, loans and dividends, who owns and benefits, plus a deeper review every five years.How cost-of-insurance disputes begin in the contract languageWhat the cost-of-insurance clause says, how guaranteed and current charges differ, what a contract allows, and how a gap with practice becomes a dispute.Choosing the guarantee age on guaranteed universal life: 90, 100 or beyondHow long should a guaranteed universal life guarantee run? Longevity risk, the shape of the price steps, what happens at the end age, and a decision list.Cap, participation and spread on the same index path: a worksheetA worksheet that runs invented index paths through a cap, a participation rate and a spread, so you can compute credits yourself and see when each method wins.From index move to account value: one IUL crediting year in orderFollow one hypothetical indexed universal life year from segment start to credit date, with the index change, cap, floor, monthly charges and new account value.Indexed universal life claims weighed one at a timeEight common pitch claims about indexed universal life, each tested against contract mechanics, charges and tax rules, with credit given where it is due.Four households weighing indexed universal life for retirementFour hypothetical households test indexed universal life against the alternatives, with round-number arithmetic and a look at where each might reasonably land.Indexed UL loan mistakes: rate, crediting and lapse trapsEight mistakes people make when borrowing from an indexed universal life policy, how each happens, what it costs and how to avoid it, with worked arithmetic.Questions to put to an IUL proposal before you signA grouped checklist for reading an indexed universal life proposal: the illustrated rate, changeable caps, charges, loans, funding and what to get in writing.Mistakes that void a no-lapse guarantee on universal life coverageLate premiums, skipped payments, loans, withdrawals and coverage changes can break a no-lapse guarantee. One hypothetical step by step, and how to protect it.One month inside a universal life policy: every deduction in orderA single monthly cycle traced with invented round numbers, from premium in through each charge and the interest credit to the new account value.Stress-testing an in-force illustration at lower crediting ratesHow to ask for a ledger at the guaranteed and a lower assumed rate, then a worksheet that finds the lapse age and the premium needed to keep the policy alive.Table ratings and flat extras on permanent policies: questions and answersThirteen questions on how a table rating or flat extra changes the premium, cash value and guarantees of whole and universal life, and how to push back.A worksheet to test your universal life statement for charge creepA repeatable worksheet for pulling charges off a universal life annual statement, computing cost per $1,000 at risk, and knowing when to ask the insurer.A universal life annual statement checklist: ten things to verifyTen checks for the yearly report on a universal life policy, with the reason for each, what a warning sign looks like and the questions to send the insurer.Switching a universal life death benefit option: a worked exampleSwitching a universal life death benefit option between level and increasing, step by step, with underwriting, insurance cost and cash value in round figures.Minimum, target and maximum premium in universal life comparedOne hypothetical universal life policy funded at three premium levels, with account values, lapse timing, tax-law limits and who each level suits.A universal life policy in its grace period: notices and deadlines in orderDay by day from the monthly deduction that exceeds the account value to the grace notice, the lapse date and the reinstatement window, with what to ask.Your universal life projection shows a shortfall: a response planWhat to do, in order, when a projection shows a universal life policy running out early: gather ledgers, test fixes, weigh a smaller benefit or an exchange.A market drop inside a variable universal life policy, quarter by quarterA hypothetical VUL downturn, quarter by quarter: falling account value, rising net amount at risk, heavier charges relative to value, and options at each stage.Variable universal life subaccounts: what you choose and what you cannotHow subaccounts, fund fees, separate account assets, transfers and rebalancing work inside a VUL, and who bears investment risk versus the insurer.A 1035 exchange from start to finish: forms, timing and pitfallsThe steps of a section 1035 exchange in order, from collecting the old policy's numbers to the tax form that follows, with what to send, ask and leave in force.Moving a policy with a loan in a 1035 exchangeFourteen questions on how a policy loan is treated in a 1035 exchange, when loan relief becomes taxable boot, and what a new insurer does with a carried loan.Agent commissions and surrender values: claims testedHow first-year commissions and acquisition costs relate to low early surrender values, with seven common claims tested against how permanent policies work.Before you replace a permanent policy: a fifteen-point checklistFifteen questions to answer in writing before swapping one cash value policy for another: what you hold, what you would get, the process and who gains.Borrowing from your own policy compared with a bank loan or HELOCApproval, interest, repayment, collateral and risk compared for a policy loan, a bank loan and a home equity line, with a worked $40,000 example.Using cash value in a financial emergency: the order to try thingsA cheapest-first sequence for tapping a permanent policy in a crisis, with what each step does to coverage, the loan balance and the tax bill.Can creditors reach life insurance cash value? Answers by situationEleven questions on when a creditor or bankruptcy trustee can reach a policy's cash value, and why the answer turns on state, timing and ownership.Fixed, variable and wash loans compared: what borrowing costs netPolicy loan rate structures side by side on a hypothetical $40,000 balance: net cost after credited interest, predictability and the questions that expose it.Your policy turned out to be a MEC: what it means and what you can doSteps after learning a policy is a modified endowment contract: confirm it in writing, understand gains-first tax, weigh your options, see a tax professional.Four retirees with an old policy: keep, shrink, convert or sellFour hypothetical retirees hold an aging life policy and a different need; each works through keeping, reducing, exchanging or selling it, with the arithmetic.How retirees lose a life insurance policy by accidentSix quiet ways a policy lapses in retirement, from a failed bank draft to a growing loan, each with the warning signs and the safeguard that prevents it.Keeping an old permanent policy affordable on a retirement incomeSteps to try before letting a policy lapse: a premium audit, dividend and cash value offsets, a lower face amount and nonforfeiture options.A lapse with an outstanding loan, worked through to the tax billA hypothetical owner's policy lapses with a large loan: how the gain is computed, why no cash arrives, and the ways owners avoid or soften the result.Myths about tax-free loans from permanent life insuranceEight claims about tax-free policy loans tested against interest, MEC rules, lapse, the smaller death benefit and how illustrations smooth over the risks.Mistakes that sink a loan-heavy policy in retirementSeven ways borrowing from a permanent policy goes wrong after 65, with the arithmetic, the warning signs in the mail and the rescues that still work.Before you take money from a policy: a loan or withdrawal checklistQuestions to settle before borrowing from or withdrawing cash value: basis, MEC status, guaranteed values, death benefit, loan terms, repayment and proof.MEC status and 1035 exchanges: questions and answersWhether MEC status follows a 1035 exchange, how a new policy gets its own seven-pay test, why paperwork matters, and what a MEC-to-annuity exchange means.The seven-pay test behind a MEC, explained with arithmeticHow the seven-pay limit works in principle, how funding speed and benefit cuts can trip it, an invented example, and why gains-first taxation makes it matter.Turning an old cash value policy into long-term care coverageWhen swapping an unneeded permanent policy for a hybrid or annuity-based care contract makes sense, what it costs, and a decision list to test your own case.A permanent life policy in a divorce: ownership, premiums and valueFour hypothetical couples show how ownership, a decree's insurance clause, a cash value buy-out and an unchanged beneficiary form can each change who gets what.Policy loan worksheet: interest, repayments and what the policy can carryA repeatable worksheet for a life insurance policy loan: grow the balance with unpaid interest, test payoff plans, and check the loan against cash value.Premium financing in principle: loan, collateral and exit planHow a third-party loan pays for a large policy's premiums, what the collateral and interest terms mean, how the exit works, and what has to go right.Questions to ask before agreeing to premium financingTwelve questions for the advisor, lender and insurer on rate risk, collateral calls, exit triggers, fees and tax advice, and what a good answer looks like.Premium financing under stress: scenarios when rates or values disappointFour hypothetical borrowers face a higher loan rate, a weak policy, a collateral call and an early death, with the arithmetic and exit choices for each.Replacing a permanent policy: mistakes that make the new one cost moreEight errors that turn a policy swap into a loss, from cancelling too early to reading projections as promises, with what each costs and how to avoid it.Rescuing a permanent policy when the loan outgrows the cash valueA triage playbook for a policy whose loan is closing in on its cash value: get the ledger, find the lapse date, weigh each fix, and run the tax checks first.Retirement myths: the reasons people drop coverage too soonEight reasons retirees give for dropping life insurance, such as grown kids or a paid-off house, tested against pensions, Social Security, taxes and estates.Should you sell, surrender or keep a policy you may no longer need?A question-by-question way to choose among keeping, reducing, surrendering or selling a policy, covering purpose, cash value, health, premiums, tax and heirs.Surrender, sell or keep an unneeded policy: three exits comparedCashing in, selling through a life settlement, or keeping and reducing a policy you no longer need, side by side on cash, tax, death benefit and who to hire.Ten checks before you exchange a policy and when to say noA ten-point checklist for a policy replacement or 1035 exchange: charges, new clocks, health, lost guarantees, loans and incentives, with the reason for each.