Clients intending to leave a legacy to children and grandchildren have a need for estate planning. They want to avoid the bite of estate taxes in order to leave as much as possible for their beneficiaries.
As a result, a common part of affluent clients' estate plans is a survivorship life insurance policy, used to cover the bulk of estate taxes.
Helping clients choose the right type of policy is an important step in the estate planning process. Certain clients prefer the security of the guaranteed premiums and death benefits associated with fixed products, while others prefer variable products for the potential lower costs and death benefit growth.
Why can't they have both? Thanks to the development of hybrid survivorship variable universal life (SVUL) insurance products, they can.
Today, a majority of clients choose a fixed product for their estate planning needs. Driven largely by the recent volatility in the stock market, these clients enjoy the comfort provided by the guarantees associated with fixed products. Many times, the price they pay for this comfort is limited cash value growth opportunity.
But, without cash value growth, there is no opportunity for premium savings or death benefit growth. The risk with not having death benefit growth potential is ending up with a life policy that has not kept pace with a growing estate.
In the past, clients wanting the upside potential of variable policies were forced to do so without the protection of lifetime no-lapse guarantees. But the recent volatility experienced in the stock market has forced many to reconsider the attractiveness of taking on investment risk in their life insurance policy.
