Have Your Cake and Eat It Too Part 2

Here is the example: 65-Year-Old Male, STD NT

One example, where we used a 65-year-old male, standard-nonsmoker and used an IUL from a good company.  In the first year, out of a $100,000 Premium, the gift would only be $3,140 which controls 97% ($970,000 of the 1 million death benefit).  If that same client tried to go out and buy a one-year term for a million dollars, that is not convertible, and no commissions paid premium would be $5,421 for a 1-year term) and for a 10-year term $7,703 that can be converted. So, $3,140 is substantially less expensive than buying the cheapest term, yet it is permanent.  At the same time, notice that the grantor has a lien on the contract (collateral assignment) which allows the grantor, the trustee, or the company head to have control of the excess.  So, in the first year 100% of the cash value is in the grantor, company head if corporate, or individual spouse, trustee. In the following flowchart, we first show how it works. The ledger example will line up underneath the flowchart. Please note that we can use different permanent products including WL, UL, IUL, VUL and of course these can be offered on a joint basis or individual design.

To sum up example over 10 years the client has accumulated value of $932,198 and has a same amount of death benefit. The total cumulative gift over those 10 years is $47,087.  With this example, the client would not have to report the gift as it is less than 17,000/year for the first 10 years.  At that time, there is total flexibility where the client’s trustee or in a company situation officer can choose to either take back some or all the money, regift that money, or continue as it was from the beginning. Either the agreement and where all parties get their share or company can forgive the reimbursement in an employer employee relationship. Of course, death gives enough cash to solve this.