I do not have a "recommended" Universal Life provider. Maybe there's someone out there that sells low-frills, low cost permanent life insurance. If there is, I don't know of them.Thank you Stinky. All the expertise I hoped for and more.I don't believe that an insurance company is held to the same standard of care on a "closed block" of universal life policies. While the company might not cut interest rates to the guaranteed rate immediately, I wouldn't be surprised if UL interest rates became less attractive over time as the block of business aged.
Hope this helps.
Now I will concentrate my worries on the TIAA Universal Life policy. Crediting rate of 3.70% over 2023-2024 (split) strikes me as maybe low, per your comments about it being driven down over time to the guaranteed rate of 3.0%.
Which raises a question perhaps shared across multiple forum members: Do you have a recommended Universal Life provider? I’m only interested in an absolute gut simple here-is-the-fixed-rate kind of policy.
This was my original plan: over-fund UL to just under the MEC level. Once MEC hit threatens, down the road, begin tax-free withdrawals of basis. Once cost basis all withdrawn, roll over remainder taxable gains into single premium policy: tax free when paid out at death.
Problems with 1035 exchange into a new policy: cost of insurance at TIAA was super-preferred level--I was a disgustingly healthy non-smoker aged 59. Not sure I could qualify for same at another company at age 71 (still a non-smoker, but …)
What to do? Technically I don’t need the remaining $250K of life insurance the UL provides (surplus over cash value), and I only have a small taxable gain so far. So I could withdraw all the basis tomorrow.
But oh, that $6200 of California premium tax I paid![:oops:]( "D'oh")
I also don’t need the cash, plenty in hand from other sources.
Advice welcome.
It sounds like you purchased the policy about 12 years ago, in 2012 or so. Do you recall what your goals were in the original purchase of the policy?
Are your 2012 goals for this policy the same as your current goals?
And just for kicks, do you have an illustration from 2012 to show how the UL policy was projected to perform at time of sale? Has the policy performed in line with your 2012 expectation, or has it underperformed?
If you don't have a continuing need for permanent life insurance coverage (and it sounds like you don't have such a need), the "easy" thing to do would be to lapse the policy and re-deploy the surrender value, net after taxes, somewhere else. Or, if your health is significantly deteriorated since time of issue, it might make sense to keep the policy and minimally fund it as needed, for the "early" death benefit that would be paid to your beneficiaries.
Based on what you've posted, it doesn't seem wise to pick "Door #3", which would be to maximally fund the policy in order to grab the 3.70% interest rate, take out partial withdrawals down to basis at some future time, and use this as a tax play. The interest rate is just too low to pile up a large accumulation of wealth in the policy, especially given the limited time left in your life.
Once again, hope this helps.
Statistics: Posted by Stinky — Thu Jul 04, 2024 4:17 am
