Step Rated Life Insurance

Many advisors design life insurance policies to require high level premiums to provide guaranteed coverage to age 100+. These high premiums are unnecessary as better, more cost effective plan designs are available.

Because Universal Life contracts can provide flexibility without forfeiting guarantees, a new approach to plan design will allow Step Rated programs to save clients premium dollars typically to average life expectancy.

A recent case we designed insured a female client age 75 for $1 million of coverage. Our client was advised by another broker to pay level annual premiums of $31,690 to provide guaranteed coverage to age 100 with the flexibility to extend coverage lifetime.

The MB Group designed the same guaranteed coverage to age 100 with the flexibility to extend coverage lifetime with an initial annual premium of $16,901 which remained level for the first 5 years then increased every 5 years thereafter. The new step premiums didn’t exceed the traditional level plans for 11 years!

This plan design saved the client substantial costs – see exhibit A.

When health changes, we advise clients to often lower their premiums since life expectancy is less than age 100. At death, this can provide the client with a substantial lower cost for the coverage.

At any time, higher premiums can be paid to extend the coverage period if the client’s life expectancy increases.

Please contact our office to learn more about this new step rated life insurance solution.

Coverage: $1 million

Policy Year Age End of Year A – Level Ins. Co. B – Step Rate Ins. Co.
1 76 $31,690 $16,901
2 77 $31,690 $16,901
3 78 $31,690 $16,901
4 79 $31,690 $16,901
5 80 $31,690 $16,901
6 81 $31,690 $25,453
7 82 $31,690 $25,453
8 83 $31,690 $25,453
9 84 $31,690 $25,453
10 85 $31,690 $25,453
11 86 $31,690 $44,725
12 87 $31,690 $44,725
13 88 $31,690 $44,725
14 89 $31,690 $44,725
15 90 $31,690 $44,725
16 91 $31,690 $53,948
17 92 $31,690 $53,948
18 93 $31,690 $53,948
19 94 $31,690 $53,948
20 95 $31,690 $53,948
21 96 $31,690 $53,948
22 97 $31,690 $53,948
23 98 $31,690 $53,948
24 99 $31,690 $53,948
25 100 $31,690 $53,948
Total Premium Years 1-10 $316,900 $211,770
Total Premium Years 11-15 $475,350 $435,395
Total Premium Years 16-20 $633,800 $705,135
Total Premium Years 21-25 $792,250 $974,875

 

OUR VALUES

To meet the unique needs of each of our clients, customizing products to protect their incomes and their lifestyles.
For nearly 40 years we have promised to always provide the best quality solutions meeting our clients’ needs without regard to our personal financial interest.
Each of our clients has a unique concern he/she is looking to protect. We approach each opportunity with an open mind as to which solution will best serve our clients.
2017-02-15T22:40:31+00:00