Questions – Whole Life

Questions - Whole Life
by Steve Goodman

CPA, MBA – President & Chief Executive Officer

Contact Steve today for more info.

Q. Is it important to determine how the policy will perform if the dividend rate paid on the policy decreases?

  1. Yes, this is very important. It is quite possible based on the low-interest-rate environment we have had the last 10 years. Even if interest rates go up, many bonds that mature will still be invested at a lower rate than the matured bond was being paid. So ask for illustrations at the current dividend rate, at a 1% drop in the dividend rate and at a 2% drop in the dividend rate.

Q. Is it important to compare whole life policies from different companies to see if the dividend rates are comparable?

  1. Yes. You should ask companies what is the current dividend rate and compare their dividend histories to see how they treat their policyholders.

Q. Should I ask captive salespeople from insurance companies like New York Life, Mass Mutual, Metlife, Penn Mutual, Guardian, and Northwestern Mutual to provide illustrations from other insurance companies?

  1. Yes. You need to be very careful when the salesman is an agent for a specific insurance company. He or she will usually try to sell you that company’s products without comparing them to the competition.

Q. Can this product be used to generate retirement income via policy loans?

  1. Yes. But if you are going to use this product to generate retirement income, make sure you understand the various loan options (including the current rate) and compare them to other products.

Q. Should I consider a high cash value or lower commission product instead?

  1. Perhaps. Some companies may offer a lower commission product that builds up more cash value.

Q. Should I consider term blend options?

  1. By putting a term blend into the product, you can reduce the annual premium. However, the number of years you must pay premiums will increase, as will the product’s risk. In a whole life policy without a term blend, the premium amount is guaranteed, but not the number of years it is paid. You can purchase whole life policies with guaranteed payment amounts and a guaranteed number of years one must pay to yield a paid-up policy. When you add a term blend, only the premium amount of the whole life portion is guaranteed.

CPA, MBA – President & Chief Executive Officer

About Steve Goodman

For more than 30 years, Steven has provided insightful solutions to the challenges of business succession, wealth preservation and charitable planning, focusing on the needs of owners of closely held businesses and high net worth individuals.

He's been featured in the New York Times and is an accomplished speaker and has presented over the years to many organizations and professional groups on efficient business succession, estate planning issues and tax strategies. Steven is a CPA who was vice president of the Trust and Investment Division of JP Morgan Chase and a supervisor for KPMG Peat Marwick, and holds an MBA from Fordham University.

Email Steve today for the business succession planning you deserve.

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