Life Insurance this time

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I Shrugged
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Life Insurance this time

Post by I Shrugged » Tue Jan 07, 2014 4:38 pm

I'm trapped in whole life hell thanks to The Bernank. 
21 years ago our business was growing like crazy, and for estate planning purposes my attorney set up an irrevocable life insurance trust and I/it bought a 1MM whole life policy.  At the time, it was all good.  The premiums were 11K/year, and the lovely illustration showed it would be paid up in 8 years.  Wheeeee!

Well, you know where this is going.  It's still not paid up.  It has been paid up, or so I thought, for a couple of years recently, but declining dividend rates have dragged me back into payments each time.  And so it is today.  The current illustration shows it will take 7 more years of payments.  By now of course I am properly skeptical of any illustration.  Today's cash value is just over $300K.

Since it is in an ILIT, albeit with a friendly trustee, I don't think I have a lot of options.  The agent is pushing me to take the cash value and purchase a universal life policy which he states will be guaranteed to maintain $1MM face value.  That's all I know at this point, I have not seen the illustration or other details.    At some point, the original policy was supposed to start building the face value to well above the 1MM mark.  Obviously that kind of growth will not happen or will be greatly diminished.  I don't know how the U-life policy would compare as far as growth going forward.  Oh, and to get the new policy I have to take a physical.  I'm in good health but it's still an unknown.

We brought our estate plan up to date earlier this year.  Based on current laws, the insurance would come in handy at my death.  Is it needed?  Well, no, but it would be nice.  I have a call into my attorney, but I thought I'd toss this out for ideas and discussion.
Last edited by I Shrugged on Tue Jan 07, 2014 5:11 pm, edited 1 time in total.
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Libertarian666
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Re: Life Insurance this time

Post by Libertarian666 » Tue Jan 07, 2014 5:16 pm

I don't know much of anything about irrevocable life insurance trusts. Does the money have to be in an actual life insurance contract or could you buy an annuity with it?
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I Shrugged
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Re: Life Insurance this time

Post by I Shrugged » Tue Jan 07, 2014 6:50 pm

Libertarian666 wrote: I don't know much of anything about irrevocable life insurance trusts. Does the money have to be in an actual life insurance contract or could you buy an annuity with it?
Don't know.  If it is possible, then the beneficiary would receive the annuity payments.  Which is not a problem.  Just saying that I no longer can get the money for myself.  That is the irrevocable part.
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pugchief
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Re: Life Insurance this time

Post by pugchief » Tue Jan 07, 2014 8:01 pm

Consult with an attorney that limits their practice to estate planning. You can generally put a low[er] cost term life policy in place of the expensive whole life version. If you keep talking to insurance agents, they will keep trying to sell you new policies that earn them new commissions.

YMMV.
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moda0306
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Re: Life Insurance this time

Post by moda0306 » Tue Jan 07, 2014 11:53 pm

A good insurance agent will be honest with you about your options.  Who is the insurance company?  A whole life contract can contain some sweet options if used correctly, but way too many agents over-promise on these things.
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