When a client’s policy has loans, a 1035 exchange to a new policy may provide a needed death benefit at a lower cost. It may also offer clients living benefits to satisfy additional needs.
CLIENT CONCERN
During a policy review, you come across an existing policy that a client purchased many years ago. It has accumulated significant cash value. However, you see that loans have been taken from the policy to pay for the premiums and/or to fund cash withdrawals. Those loans, combined with higher mortality costs and high loan interest charges, have subjected the policy to a potential unintended lapse.
If this scenario fits the client’s current life insurance policy, the client has three courses of action to choose from:
