The prime reason for survivorship life is to provide liquid funds at the death of a surviving member of a couple, usually to pay the federal estate tax. Earlier this month, proposed estate tax changes (this time tied to a raise in minimum wages) failed in the U.S. Senate again after passing in the House.
While the political football game seems to be over for now, it still leaves our industry offering a solution to a vexing and complicated system whereby the federal estate tax reduces and disappears by 2010. It then magically reappears at older and higher rates in 2011. Other than bad luck for the heirs of people who die on New Year’s Day of 2011, it also means that demand for survivorship life’s “pennies on the dollar” solutions will be required to help offset the tax burdens to come.
There are many more reasons to offer and buy survivorship life, but for now at least we have the somewhat likely future of a federal estate tax. And you didn’t think the states were going to let anyone off the hook soon either, did you?
The excerpts in this report focus on illustrated values for whole, universal, indexed universal and variable life survivorship products from the leading companies in the market. And while these charts are only slices of the Full Disclosure database, they will give you an idea of how these products perform on a prospective basis. The additional components in the latest edition of Full Disclosure are low-cost long-term guarantees of premiums and death benefits in flexible premium policies for both SUL and SVL policies. These tables provide minimum annual premiums to age 100 or beyond (lifetime) with little or no cash value at maturity.
In addition to the guaranteed premium charts, three others cover current illustrated values for variable, universal and whole survivorship life. These illustrated values are based on current interest or dividend crediting, expenses and, in the case of variable designs, a predetermined crediting rate. Full Disclosure applies the internal rate of return method to current illustrated accumulation values and current death benefits measured at policy durations 30 years dependent on age combination. The IRR of cash values rises over time, as the IRR for the death benefits falls.