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The goal of this strategy is to identify the cash value from an existing policy and input that value into Ensight Intelligent Quote to compare approved products across the carriers and arrive at a higher Death Benefit or a longer guarantee in a new product. The IRS rule 1035 allows us to exchange the net cash value from one life insurance product into another on a tax-free basis.
One of the most common and productive services to our clients is policy review; evaluating current life insurance policies to determine their performance. In some cases, policies may not be performing or may be at risk of lapsing. If the policy has positive net cash value, we can evaluate whether we can find a better-performing product by using a 1035 exchange of cash into a new product to benefit the client.
Case Example
Valued Client
Male
Age 45
$250K 1035X
Preferred Non-Tobacco
Guaranteed to Age 95
1. To begin, enter your client’s basic information, SAVE and name the case, and then click Go to Product Type to continue.
2. Product Type Page select only:
3. Solve For Page: Fill inputs as shown
Select a No Lapse Guarantee to ensure that the client will have death benefit coverage through their selected age, in this case, age 95.
4. Policy Options Page: Fill inputs as shown
On the Policy Options page, enter the 1035 exchange cash value amount into the Cash Value Amount field, and again in the 1035 Exchange Basis field.
5. Disbursements Page: Select ‘No’
Then click the progress arrow to go to the next page.
6. Reports and Riders Page: Select yes on ‘Internal Rate of Return’ (IRR) only.
Then click ‘Go to Agent Details’ to continue.
7. Agent Details Page: Enter agent information.
Then click ‘Go to Product Selection’ to continue.
8. Product Selection Page: Click on desired products to illustrate and compare. In this example, you may want to select a mix of products, such as GUL and IUL, that have built-in guarantees and guaranteed death benefits, as well as products that accumulate cash value.
9. Summary Page: You will now see a scrolling list of products to select from.
We chose to include guaranteed years (Gtd. Years) and non-guaranteed years (Non-Gtd. Years) to see if the products we selected ran to the specified no lapse guarantee (age 95), and to see how long the non-guaranteed values will last. We also selected 'Non-Guaranteed Cash Value' to compare the IUL products’ cash values.
10. Summary Page (Continued):
- For this comparison we will choose the products with the highest Death Benefits.
Click ‘Initial Death Benefit’ to sort column high to low. - This case design can also be saved to your ‘Intelligent Quote Homepage’ by clicking SAVE AS in the top right corner. Make sure to use your naming convention when naming the case.
- When you check the boxes to select products, the ‘Download Selected’ and ‘Summary PDF’ buttons will become highlighted. ‘Download Selected' will download and save the illustrations to your computer. You can download a PDF version with the ‘Summary PDF’ button and print or send it as a benchmark or summary of the competitive products.
- Click on the illustration icon to see the full compliant illustration.
- Select the desired products to and click 'Create Presentation' to open the case in Ensight Presentations, where you can compare and present all the ledger values in the Product Table, Spreadsheet, and Charts.
