Policy Rescue Using 1035 Exchanges

  • Originally published May 18, 2010 , last updated May 24, 2016

Do you have clients with under-performing policies? Do they want to protect the 1035 exchange rollover premium? Is the client's health a concern with regard to underwriting?

You can help your clients meet their 1035 exchange needs with North American Company's Custom GrowthCV universal life insurance product. It offers great cash value growth potential, a 6.0% current interest rate, plus guaranteed death benefit coverage for 20 years. With a low minimum face amount of $25,000, Custom GrowthCV may be the ideal solution.

Custom GrowthCV Features for 1035 Exchanges Include:

Waiver of Surrender Charge Option with Table Shaving Benefit

The Waiver of Surrender Charge Option will waive surrender charges unless the policy is surrendered as a 1035 exchange. For policies that include the Waiver of Surrender Charge Option, qualifying rated cases through table 4, will be classified as Standard. It's a great competitive feature for your cases.

Premium Bonus

A 20% conditionally guaranteed premium bonus is added to the account value as an interest credit in policy years 11-15. Money will be paid in the form of interest credited to the account value. The Premium Bonus is the lesser of the average net premium and 120% of the commissionable target premium. The premium bonus is calculated by averaging premiums paid over the first 10 policy years (less withdrawals and debt) and is spread out over 5 years (20% paid annually in years 11-15).

Interest Rate Bonus

To help your clients' build cash value accumulation, the Custom GrowthCV provides a conditionally guaranteed interest rate bonus. The current bonus rates are 1.0% interest in years 11-20 and 1.15% in years 21 and beyond (if the company is paying higher than the guaranteed interest rate).

Chronic Illness Accelerated Benefit Rider

This rider advances a portion of the death benefit if the insured is certified as being chronically ill, which is defined as permanently unable to perform at least two Activities of Daily Living or a severe cognitive impairment. The rider is available to age 75 and up to table 4.

Additional Features Useful for 1035 Exchanges

  • Net zero cost loans available in years 6+
  • Automatic Distributions Option
  • No premium payments after age 100
  • Overloan Protection Benefit
  • Underwriting requirements that help you place cases

If you're looking for a fixed UL product for 1035 exchanges with great long-term cash value growth potential, try illustrating the Custom GrowthCV.

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