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How to Model Cash Value Life Insurance (5 Pay with 500k death benefit and 16k withdrawal every year after the 11th year to age 90)?

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Last Post by Stuart Matthews 4 years ago

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DKT

(@tom577)

New Member Customer

Joined: 6 years ago

Posts: 1

Topic starter August 11, 2022 11:38 pm

It would seem to me the best way would be to take the illustration the Insurance company puts out and just importing or manually copying them into PRC.

The data columns imported would be Person, Year, Premium, Net Distributions, Cash Value and Death Benefit.

Basically, manually filling in the "Projection of Cash Value and Death Benefits Table" under the "Cash Value Life Ins." tab section

Since there are thousands of different policies this should take care of most and would match the Insurance companies' program exactly.

The Insurance companies could run a new illustration every year.

Any thoughts on this idea?

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Stuart Matthews

(@smatthews51)

Member Admin

Joined: 6 years ago

Posts: 618

August 20, 2022 9:02 am

DKT,

I'm not quite clear on your post. Are you proposing a PRC design change?

Thanks,

Stuart

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Bill Hines, Advice-Only Flat-F...

(@hines202)

Reputable Member Customer

Joined: 6 years ago

Posts: 321

September 6, 2022 11:42 am

A big problem for PRC here is that there are *so* many confusing, complex variations in the "cash value" life insurance space (universal, whole, variable, variable universal, indexed, <insert the latest fad/gimmick here>). Not to mention the complexities of the many policy riders and associated add-on costs for those.

My advice to clients is (after analysis) usually to procure simple, easy to understand, quality, inexpensive level term life insurance until you're self-insured with high assets, then cash out the expensive, complicated cash-value variants and invest the money wisely.

Most folks, especially those diligent enough to be doing the type of planning that PRC entails, are building wealth and basically self-insured at some point. They don't need to be paying for "life" insurance into their 90's and to death. The heirs do well with property, investment assets, etc. Spend the money on Roth conversions and nicely pay the taxes for them. They say your payments don't go up, but that's the part that *you* pay. Check what they're dipping into your account for as the years go by, if you can even understand it. Read that lengthy, complicated contract very carefully. Demand a simple explanation of anything that's confusing (usually most of it).

Remember, if the life insurance company goes under, or sells your policy to another company that goes under, the policy is no good. You get in line for the state bailout money or bankruptcy creditor list, if anything is left.

"Buy term and invest the rest."

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Stuart Matthews

(@smatthews51)

Member Admin

Joined: 6 years ago

Posts: 618

September 12, 2022 11:03 am

@hines202 Thank-you! This is why I tried to provide a generic design that hopefully gets close enough for those that choose to use it.

Stuart

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