Additional Policy Options FAQs
What is a paid-up additions (PUA) rider?
A paid-up additions rider is a tool used to increase the cash value of a whole life insurance policy as part of a High Cash Value Banking Policy. It helps an account grow cash value much faster than a traditionally structured whole life insurance policy.
A paid-up additions rider usually cannot be added to a current policy; they are typically structured in to a whole life insurance policy at the time of purchase.
What is a modified endowment contract (MEC)?
A modified endowment contract is a life insurance policy with cumulative premiums that place the cash value of the policy above the federal tax law limits. Any withdrawals from a modified endowment contract, other than the death benefit to a beneficiary, are subject to a 10% withdrawal penalty before age 59 ½. Modified endowment contracts are useful tools for passing on legacy to beneficiaries but not for living benefits.
High Cash Value Banking Policy's are whole life insurance products specifically formulated to avoid becoming modified endowment contracts.
Can term life insurance be converted to whole life insurance?
Yes, most term life insurance can be converted into a whole life insurance policy. Schedule a free consultation with John Stewart to learn more.
What is a guaranteed insurability rider?
A guaranteed insurability rider gives the policyholder the option to purchase additional insurance coverage on a specified policy without having to go through the hassle of getting additional medical exams, for a specified period.
What is an accelerated death benefit?
An accelerated death benefit is an insurance rider that lets the policyholder access the death benefit of their whole life insurance policy while they’re still living, should they be diagnosed with a terminal or critical illness.
To qualify for an accelerated death benefit, a policyholder typically need to provide certification from a doctor that they have a shortened life expectancy. In most cases, it can be included with a policy at no extra cost. For help adding an accelerated death benefit to your policy, contact your Wealth Strategist.
Can an IRA be rolled over into a whole life insurance policy?
While it’s not technically considered a roll over, funds from an IRA can be used to pay whole life insurance premiums. Using IRS rule 72(t), money can be moved between these two accounts without being penalized for early withdrawal, but the owner will have to pay taxes on the amount withdrawn from the IRA.