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Katt & Company is a national fee-only life insurance advising firm. The June 2002 Forbes magazine, and a July 16, 2003 Wall Street Journal article, name Peter Katt as one of only four nationally recognized advisors. The Forbes article states that, "…advisers are well worth the money… These savants are working for no one but you…" For references please contact us. Managing UL Policies "Dave (and nearly 100% of all other UL policyholders) didn't realize he is responsible for managing his policy. This primarily means changing the target premiums as crediting rates change, or possibly reordering things in the presence of very poor health." I was delighted that Dave called me last month to help him understand his life insurance. At age 70, he decided after 15 years he should have his Acme Life UL policy reviewed. The agent that sold it was long gone, another agent just wanted to talk about the sale of a new policy and Acme Life's home office only confused him. Dave's $1,000,000 UL has cash values of $152,000 with annual target premiums of $13,500 set in 1994 at the time of purchase. The crediting rate in 1994 was 8.25%. It is 4.5% today. Dave's policy is underfunded. If he continues paying the same $13,500 premium and the crediting remains at 4.5% it will run out of cash value and terminate at 84. There is about a 70% probability Dave will live to 84. Dave is generally in fair health for his age. I tested to determine if it made sense to move to a new policy. It didn't. Dave has three choices: 1. Continue the same premium of $13,500 and his beneficiary collects $1,000,000 if he dies before the policy runs out at around 84, which is within his life expectancy; 2. Reduce the death benefit to $650,000 and continue the same $13,500 premium. Based on the 4.5% crediting rate the policy will continue for his lifetime; or 3. Increase his annual premium to $26,000 and continue the $1,000,000 death benefit. Based on current pricing this configuration for the policy will allow it to last his lifetime. Dave decided to increase the premium to $26,000 and continue the $1,000,000 death benefit. He was instructed to contact me if the crediting rate increases (it can't go lower as 4.5% is the guaranteed rate), or his health declines. If the crediting rate increases we can reduce the new $26,000 premium. If his health declines such that it becomes nearly conclusive he won't live, say, another five years, we can stop paying premiums because the policy will have enough cash value to fund for at least the last five years. (This strategy is a great saver for clients). Dave (and nearly 100% of all other UL policyholders) didn't realize he is responsible for managing his policy. This primarily means changing the target premiums as crediting rates change, or possibly reordering things in the presence of very poor health.
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