By Keiter CPAs
It is our goal as tax and accounting advisors to go beyond traditional tax preparation and identify tax savings and planning opportunities for each of our clients. In this article, Eric Hieber, Winged Keel Group, shares case studies to highlight some of the ways you can increase the value of your whole life insurance policies using newer, more innovative product designs. We hope you find this article informative and if you would like to learn more about life insurance planning, please contact your Keiter representative or Email | 804.747.0000.
Innovating Whole Life Insurance Policies
Life insurance products have experienced considerable evolution over the past 30 years. Prior to 1980, clients essentially had two product choices – term and whole life. Since then, numerous new products have been developed with different features designed to meet each client’s specific needs. These features include:
- Guaranteed death benefits
- Flexible funding and benefit structures
- Long-term care benefits
- Control over the investment strategy of policy values
- Extended maturity options to provide true lifetime benefits
We will use a few case studies to highlight some of the ways we have worked with clients to increase the value of their whole life insurance policies using newer, more innovative product designs.
Isn’t Life Insurance Cheaper at Younger Ages?
Many clients are unaware of the alternatives they have to leverage newer product designs and innovate their older life insurance portfolios. We often hear that life insurance is “cheaper” at younger ages so they question the value in updating a product that was purchased 10, 20 or 30 years ago.
While it is true that life insurance expenses are typically lower at younger ages, there are two reasons the pricing may be better using new products:
- Insurance companies update their pricing assumptions to reflect longer life expectancies for new products – in most cases, existing policies still incorporate the old pricing.
- Mortality tables now extend to age 120 – this means the policy’s expenses are amortized over a longer period of time resulting in potential pricing advantages.
About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.