The life insurance industry has unquestionably been redefining itself over time. For many years, it had been a field solely known to deliver agreed upon sums of money in the event of the insured individual’s passing. However, it has grown to be much more than that. As a matter of fact, many people looking to buy life insurance today often have living benefits — not death benefits — in mind as their primary reason for looking to buy a policy.
Predominantly, people still buy life insurance in the event of one’s demise. However, it’s not at all uncommon to hear agents today use the phrase, “life insurance in case you live.”
During the last six years I’ve been an advocate of overfunding universal life policies. Like many other licensed agents, I’ve touted the notion of using policy loans as a way to supplement a client’s retirement. When a policy is structured correctly, the policy owner can utilize policy loans to accomplish a way to create a tax-free income stream while living. That feature alone has made universal life a tremendous product. Consequently, we’ve seen its market share broaden over the course of the last decade. Until more recently, that was really the standalone living benefit provided by these policies.
As has been the tradition in the life insurance industry, a revolutionary universal life product has been newly released and is now available to the marketplace. Combining the benefits of an income tax-free death benefit and a tax-free income stream in retirement, this new product also lets the policy’s owner enjoy the death benefit without even dying. Take, for example an event of chronic, critical or terminal illness, where such an occurrence would trigger a payment to be made by the insurer. Based on the idea of discounting the death benefit, the owner would actually accelerate a percentage of the death benefit. In the past, people had to buy and pay premiums on separate policies, such is the case no more.
If the policy owner chooses to accelerate the death benefit upon a qualifying event, the amount of the accelerated benefit discount would depend upon the insured’s age. If the insured is older, the discount will be smaller.
Without a doubt, the completeness of this policy’s features demonstrates another giant step forward taken by the insurance companies. In an effort to evolve their product lines, carriers must realize the need to take strides towards offering increasingly consumer-friendly policies. I don’t think that anybody would disagree that this new line of life insurance policies is hot. Coverage that extends beyond death to critical illness, terminal illness, chronic illness and tax-free supplemental retirement income is more than I could have imagined ever representing when I first got in the business. When the carriers we represent get creative and break away from traditions, it paves the way for its agents to find success because of the marketability.
James Petrinovich works with Freedom Equity Group in Campbell, Calif.
Rediscover a powerful planning opportunity with Section 79
By Nichole A. Crawford