Client Report on Universal Life Funding

Case Synopsis

Fred and Ethel 76/75 years old - Fred is retired banking executive and investor - Net worth of some $15,000,000 - $3,000,000 level death benefit (defined-benefit design) second-to-die universal life (UL) policy - market-priced - $1 of cash value needed at maturity (25th policy year, Ethel's age 100) - lifetime extension.

Seller of policy (who is also fiduciary trustee) established a funding goal that caused the target premium to be too high. We figured this out and legitimately reduced the target premium from $46,000 to $18,100 to accomplish the same thing. This has the potential to save Fred and Ethel $340,000 present value.

Key Concepts

• Defined benefit vs. defined-contribution
• market-priced vs. static-priced
• $1 cash value at maturity vs. paid-up for death benefit at maturity
• Life time extension / defined-benefit, market-priced policy management.