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.