Life Insurers Create Escape Clauses To Guard Against Estate Tax Reform. (Life/Health).Phoenix Cos. and Lincoln Life, both of Hartford, Conn., and Boston-based Manulife Financial have joined a growing list of insurers that promise to let policyholders cancel or modify their life policies if the federal government extends the estate tax repeal. The Phoenix LifePlan Program, offered through Phoenix Life Insurance Co., offers options with all newly issued universal life Universal life A whole life insurance product whose investment component pays a competitive interest rate rather than the below-market crediting rate. and variable universal life policies subject to a minimum face amount and state approval. At the specified policy anniversaries, policyholders may increase their coverage without a medical exam or reduce their coverage or exchange their policy for an annuity, without incurring a surrender charge. Survivorship survivorship n. the right to receive full title or ownership due to having survived another person. Survivorship is particularly applied to persons owning real property or other assets, such as bank accounts or stocks, in "joint tenancy." Joint tenancy includes the right of survivorship automatically, except that in some states joint tenancy of a bank account creates only a presumption of survivorship which might be disproved by evidence that the joint policyholders will be allowed to convert some of the death benefit into single-life coverage without a medical exam or incurring a surrender charge Surrender Charge A fee levied on a life insurance policyholder upon cancellation of his or her life insurance policy. The fee is used to cover the costs of keeping the insurance policy on the insurance provider's books.Notes: If in advance the insured party informs the insurer of the cancellation of his or her policy, and then continues to pay for a period of time before the actual cancellation, the surrender charge is usually waived.. To complement the options, Phoenix has developed a series of strategies to address family legacies, supplemental retirement plans, spousal lifetime support, business succession, retirement distribution, education funding for children and grandchildren, and help for special-needs individuals. Lincoln Life's offering is through a rider that gives policyholders the right to surrender their universal life contracts without incurring surrender charges if Congress extends repeal of federal estate taxes through at least Jan. 2, 2013. The rider applies to single-life and survivorship policies. Repeal is currently scheduled to end after 2010. Lincoln also offers a policy-split option for survivorship policies and the opportunity to adjust coverage without penalty to accommodate clients' changing needs. Manulife added Estate Tax Advantage 2010 to its survivorship universal life product. Subject to restrictions, the new provision can return premiums in 10 years if insurance coverage is no longer needed. To use the provision, the policyholder must prepay 10 years of premiums within the first four years. The product also guarantees that there will be no increase in cost of insurance for the first 10 years. |
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