Introduction Of 40 Year Old Person Insurance Lawyer And Policies In 2022 Case Study
40 Year Old Person Insurance Lawyer And Policies In 2022 Case Study. Have you ever seen the benefits of whole life insurance concerning the cash value is a safe liquid tax-free area to position money you can borrow against it continues to compound if you don’t like the idea of payments can I just make a one-time lump sum payment and be done with it?
Whole life insurance policy
We are going to look at an age 40-year-old individual who has a moderate pile of cash about 2 million dollars that he would like to dedicate toward a whole life insurance policy now in prior videos we have gone through the most efficient way to get money into a policy and it is rarely a one-time lump sum payment unless.
We look at a mec policy but per but assuming we want to prevent a modified endowment contract from occurring or I have to deal with taxes on the gains if I ever access it ruins a lot of the benefits of a cash value product if I want to prevent that typically the best starting point is a two-pay meaning if I have two million dollars total.
That I’d like to allocate toward a policy breaking it up in a two pay would be over two policy year payments of one million dollars each now what you can do with these types of strategies take two payments of one million dollars is depending on your age and when your date of birth is you may be able to backdate the policy were often with a two-pay strategy.
What is the most efficient strategy
We can get two payments in so the first year’s premium payment and pua payment a million dollars in and then six months later we can make the second year payment so we can often be creative when it comes to backdating a policy getting funding into the policy faster depends on my age and such I would check out our backdating video for full details on that but.
What we’re going to look at in this case study is what is the most efficient strategy to get that two million dollars into a whole life insurance policy that is specifically designed for maximum cash value now we’ve got a two pay for pay seven pay and ten pay we’re going to look at a 10 pay policy which has the strongest internal rate of return in this particular case with mass mutual. You Can Also Read $1 Million Over Few Years – Dividend Values Insurance Guide.
So their 10 pay policy does produce strong internal rates of return when we look at it, particularly on a non-guaranteed basis the guarantees sometimes tell a little bit different story but we’re going to focus just on the present dividend rate in this video and I’ll add some additional context for awareness too but with these different scenarios, 10 pay is as long as.
10 years total of 2 million dollars
We can pay into it for 10 years total of 2 million dollars divided by 10 comes out to 200 thousand dollars per year pay I’m condensing that payment of 2 million dollars into two payments of 1 million each and then I still have a premium due beginning year three but I’m not paying it so the policy has to pay for itself through dividends and interest and I can execute.
That reduced paid up in policy year eight we’ve had some recent content where we go through the differences between a premium offset and reduced paid-up option but then we’re gonna look at a for-pay a seven pay if I fund right up to the mech limit for seven years and then stop it’ll be interesting to see this now if I’m making these large payments at age 40 with a 1090 split.
What does that mean when I design a policy I have to play the game call it and I have to know the rules of the game one regarding policy design my money can go toward the insurance premium or the pua component 1090 a 10 minimum premium is as low as mass mutual as a company will allow a policyholder to push their premium down if we go lower than that right on the software.
Giant term insurance rider to raise
You get a warning message stating this case design has a total premium that exceeds 10x the base premium and will not be approved for sale so we maximize everything based on the limits that MassMutual offers and then we have the IRS total death benefit has a direct relationship to the mech limit check out any of our policy design videos where we walk through that so point here is if.
We have a 10 premium with a 10 pay product a 10 pay product how that works is if i have a 100 000 base premium i’d have a mech limit of about a hundred thousand dollars a little bit more that means i am going to need a giant term insurance rider to raise that mech limit so we’re going to go through the cost of the term rider here as well just because it is good to provide additional transparency to know.
What percentage of money money needs to go toward the term rider in this particular case term riders just to give you a little bit of info the two pay-in-for-pay will be the best performing policies based on his age of 40. if he was older that might not be the case but just to kind of jump to one conclusion just because I’ve already prepared the numbers and knew beforehand the two pay and the for-pay produce.
The two pay over 11 million dollars in term insurance
The strongest results look at the size of the term riders here which must remain on the policy for at least seven years so in the two pay over 11 million dollars in term insurance a giant term rider does this make sense or maybe it makes sense to go with the higher base premium and lower term rider well when you put it into perspective and look at the term writer costs and such.
Where’s your money going premium pua throw a term writer in there as well a term rider can be considered premium it is a term premium but where is the money going here are the percentages you’ll see when we break it down the base premium will be at a clean 10 per cent then the term insurance rider for example 40-year-old male with an 11 plus million dollar term insurance rider it’ll be about one per cent comes out to about 1.3 per cent to be precise of his total payment and the ratios are equal from policy to policy.
The same is true with the forepay if we looked at the other examples it would be the same thing too but that’s the actual percentage of his payment going toward a term policy and this is mass mutual’s renewable term insurance writer which is not a one-year term rider so in this particular case with a renewable term rider it starts higher but while it has the word renewable term rider in it.
The most efficient strategy
It is level for the first 10 years based on their non-guaranteed charges which have been the case since they issued it to my knowledge in 2020 when I say issued it the level term premium for the first 10 years all gives us a total payment of 100 so let’s look at some numbers shall we so if you’re considering this right if you’ve got a lump sum of money and you say I want to get a lump sum into the policy.
What’s the most efficient strategy often we feel hey can I just give you a check upfront and be done with it you can but a one pay is rarely the most efficient strategy depending on your age results will vary at age 40 to pay based on the present dividend interest rate looks pretty darn good especially long term however I would lean toward a for pay.
A three pay or a for-pay personally especially in the event dividend rates come down a little bit especially with a 10 pay product we can provide more info on that or reach out if you have questions but you will see favourable results based on everything right now however there’s some of the unseen that we just want awareness on as we build these policies out just to make sure everything’s set up properly.