Planning Trends Relating to the Demise of DOMA
As states began to legalize same-sex marriage in the early part of the twenty-first century, an inevitable conflict arose with the federal Defense of Marriage Act (DOMA), which broadly prohibited the federal government from recognizing the legality of same-sex marriage even when such marriages were permissible under state law. The legal requirements of marriage has […]
Planning Trends Relating to the Rise of ATRA
For over twenty years, from 1987 through 2003, the federal estate and gift exemption remained relatively unchanged (gradually increasing from $600,000 to $1,000,000) in their planning trends, and the federal estate tax rate was at least 50 percent. Thus, during this time period the federal estate tax was likely one of the top estate planning […]
Our Experts Explain the “Redetermination Period” Clause Within Current Assumption Whole Life (CAWL) Insurance Policies
Often insurers initially configure CAWL to resemble a traditional whole life policy with level premiums payable for life or as a limited pay policy where higher level premiums are paid for some specified period, such as ten, fifteen, or twenty years, or until age sixty-five. At the time of issue, the premium and death benefit […]
What Current Assumption Whole Life (CAWL) Insurance Proposals and Ledgers Do Not Reveal
It is important to know what Current Assumption Whole Life (CAWL) Insurance proposals and ledgers do not reveal. Insurance companies or their agents should tell purchasers of life insurance, either verbally or in writing, the following additional information: The investment strategy employed by the life insurance company, (e.g., pure portfolio rate, modified portfolio rate, weighted […]
Facts to Know about the Net Investment Yield with Current Assumption Whole Life (CAWL) Insurance
Over the long run, insurance companies cannot credit more interest to policy cash values than they earn on their general investment portfolios. To assess a company’s long run interest crediting ability, one should evaluate the insurer’s current portfolio and its investment philosophy. As a general rule, insurance companies invest their portfolios predominantly in long-term corporate […]
Mortality Charges within Current Assumption Whole Life (CAWL) Insurance
A CAWL contract explicitly states the maximum mortality rates it will charge for all ages and guarantees that mortality rates will not exceed those maximums. Many companies now use the 2001 Commissioner’s Standard Mortality (CSO) table as the basis for their contractually guaranteed maximum rates on newly issued policies, but some companies still use the […]
Expense Charges within Current Assumption Whole Life (CAWL) Insurance
Principally two elements comprise the expense charge: (1) a fixed annual fee, plus (2) a percentage of premiums paid. The company may or may not reveal these fees in its original policy illustration. However, even if it does, the company usually does not guarantee that the expense charges will not change. Actual expense charges may […]
4 Key Factors in How Life Insurers Credit the Accumulation Account in Current Assumption Whole Life (CAWL) Insurance Policies
Selecting the best cash value life insurance policy is a difficult task involving a number of complicated concepts and analyses. However, because the amount insurers credit to cash values on CAWL policies is a critical element of the overall cost of the protection, prospective insureds should put primary focus on how the company determines the […]
How to Read and Understand a Current Assumption Whole Life (CAWL) Insurance Proposal Ledger
It is important to understand your Current Assumption Whole Life (CAWL) Insurance Proposal Ledger. The principal source of information regarding a new policy is the policy illustration or ledger. The table above shows an annotated policy illustration with the following commentary. Base mandatory premium combined with a rider (similar to a paid-up additions rider for […]
Our Experts Reveal 8 Different Methods Life Insurers Use to Credit Interest on Current Assumption Whole Life (CAWL) Insurance
All CAWL policies, just like other types of cash value policies (except variable life), have a guaranteed minimum interest rate. Historically, the guaranteed rates typically ranged from 4 to 6 percent. However, over the last decade of relatively low market interest rates, guaranteed rates on newer policies have declined. The rate insurers actually credit to […]