Planning Trends Relating to the Demise of DOMA

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 always been governed by state law, and DOMA created circumstances in which same-sex couples saw their marriages recognized by some…

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Planning Trends Relating to the Rise of ATRA

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 concerns for wealthier individuals and couples worth more than $1 million. Using life insurance to provide liquidity for the payment…

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Our Experts Explain the “Redetermination Period” Clause Within Current Assumption Whole Life (CAWL) Insurance Policies

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 levels are fixed, just as with traditional whole life policies. However, after a time, called the “redetermination period,” the company…

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What Current Assumption Whole Life (CAWL) Insurance Proposals and Ledgers Do Not Reveal

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 average portfolio rate, old money or new money) in order to warrant the current interest rate assumption. Although not reflected…

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Facts to Know about the Net Investment Yield with Current Assumption Whole Life (CAWL) Insurance

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 and government bonds and mortgages. However, the proportions invested in each type of asset as well as the quality, duration,…

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Mortality Charges within Current Assumption Whole Life (CAWL) Insurance

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 older 1980 CSO mortality table for their new policies. In addition, all policies issued before about 2002 used the 1980…

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Expense Charges within Current Assumption Whole Life (CAWL) Insurance

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 increase or decrease in future years. Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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4 Key Factors in How Life Insurers Credit the Accumulation Account in Current Assumption Whole Life (CAWL) Insurance Policies

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 amount they credit to the cash accumulation account. The amount insurers credit to the accumulation account each year depends on…

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How to Read and Understand a Current Assumption Whole Life (CAWL) Insurance Proposal Ledger

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 a traditional whole life policy) which accommodates additional money, resulting in an annual payment of $2,001. Insurability classification for this…

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Our Experts Reveal 8 Different Methods Life Insurers Use to Credit Interest on Current Assumption Whole Life (CAWL) Insurance

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 cash values, called the current rate, is (or has historically been) higher than the guaranteed rate. Companies use various methods…

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