A life insurance advisor approached the Modern Life team with a high-earning client who was nearing retirement. The client knew that his permanent policy wasn’t as efficient as it could be, and he wanted to reduce his premium while maintaining the same level of coverage. Through creative case design and carrier negotiations, the Modern Life team was able to provide the client with better coverage for a reduced cost.

Background

An advisor who was working on a complex case with one of his clients was referred to us by another advisor who had worked with Modern Life. The client was a high earner in his early 60s who wanted to ensure that his finances were in order to finance successful retirement.

The client also wanted to ensure that his dependents were covered should he pass away during his working years. Following his planned retirement, he wanted a smaller permanent policy to remain for estate planning purposes.

As part of the financial planning process, the client realized that he had a permanent product that was in force that wasn’t as efficient as it could be. The client’s existing coverage was a $2.5 million permanent policy with $220,000 in cash value. He wanted to roll the cash value over to reduce the out of pocket cost while maintaining a level of coverage.

The Case

The advisor had not worked with us before, so he submitted the case to both his existing brokerage firm and Modern Life. Our team reexamined the existing policy with the goal of helping the advisor meet the client’s needs and provide maximum value.

The client was in his early 60s and had experienced a handful of medical conditions that could make underwriting a challenge, including cardiovascular concerns and chronic diabetes. The client had also previously undergone treatment for skin cancer, which was in remission.

The Modern Life team examined the application and supporting medical documents. Our medical and underwriting specialists quoted the case at T2 and T4, but believed that if the case was presented the right way, a standard rating was possible. The team pinpointed John Hancock as the carrier most likely to provide a competitive offer, and also proactively submitted the case informally to several other carriers to ensure that the client could obtain the best coverage at the best price.

At the same time, we worked with the advisor to get a better sense of the client’s expectations. Due to the complexity of the case, we felt that we may be able to offer a more creative, comprehensive solution that offered better coverage than the client expected, while still saving him money.

The Result

The original design proposed by the advisor split the coverage between Modern Life and another brokerage firm, with Modern Life handling a $1.5 million permanent policy, and the other brokerage firm placing a $1 million term policy.

While Modern Life’s informal submission resulted in a T2 quote, the Modern Life team negotiated the offer down to standard. The other carrier, through the other GA, which originally quoted at T4, came back at T6 for the $1 million term policy.

Because of the variance between the two quotes, the Modern Life team suggested an alternative design for the client. Instead of a term and permanent blended offer, we redesigned the IUL to entirely accommodate the client’s insurance needs.

The resulting policy increased the client’s death benefit from $1.5 to $2.5 million for the first 16 years rather than have him take out a separate term policy. However, the client only paid an increased premium for the first 10 years of the policy, effectively buying 15 years’ worth of coverage for 10 years’ cost.