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PUA riders: getting the most out of whole life, now and later: adding a PUA rider to a whole life policy can boost the policy's death benefit and allow policyowners to access cash while they're still alive.

[ILLUSTRATION OMITTED]

Adding riders and supplemental benefits to whole life products can help you customize a policy to fit your specific client's needs. Because riders--additional sets of terms and conditions not included in the original policy--usually provide a benefit to the policyowner, an insurance company often charges an extra premium for them. While some riders are designed to increase the death benefit of the policy, others increase the policy's living benefits.

Although exact descriptions, along with full conditions and exclusions, for riders vary from company to company, some of the most popular offerings are generally described as follows:

* Accelerated Death Benefit: Makes it possible to receive a part of the death benefit prior to the death of the insured if a physician has certified See certification.  terminal illness.

* Accidental Death Benefit: Provides payment of an additional benefit amount if the insured dies as a result of an accidental bodily injury.

* Children's Insurance: Covers all children named in the application under a certain age.

* Waiver of Premium Waiver of premium

A provision in an insurance policy that allows payment of insurance premiums to be permanently or temporarily stopped in the event the policyholder becomes incapacitated.
: In the event a policyowner becomes disabled, the policyowner will no longer be required to make premium payments after a specified length of time has passed.

* Term: Provides a fixed amount of term insurance that is added to the whole life policy for a specified amount of time. This rider, when used with a whole life insurance policy, can cost-effectively increase the death benefit of a whole life policy because it combines the benefits of whole life insurance--including the cash value it builds--with the low cost of term insurance.

* Guaranteed Purchase Option: Does not require evidence of insurability to purchase additional life insurance at specified times during life.

* LTC LTC
abbr.
lieutenant colonel
 Acceleration: Generally enables the policyowner to use all, some or none of a policy's death benefit to pay for long-term care.

While all of these riders can be useful when used with the appropriate clients, perhaps one of the most versatile and most popular riders in recent years is the Paid-Up Additional Insurance rider, often known simply as PUA Pua (py`ə), variant of Phuvah. . When it is added to a basic, whole life insurance policy, it can offer an easy way to increase the living benefits of the policy because it often increases the amount of guaranteed cash value as well as ultimately increases the guaranteed death benefits.

PUA's advantages

A PUA rider may offer your clients:

* Additional protection for beneficiaries

* Additional cash value, which can be used for policy loans or partial surrenders

* Tax-deferred values if the policy is not a Modified Endowment A transfer, generally as a gift, of money or property to an institution for a particular purpose. The bestowal of money as a permanent fund, the income of which is to be used for the benefit of a charity, college, or other institution.  Contract (MEC MEC Ministério da Educação (Ministry of Education)
MEC Ministerio de Educación y Ciencia (Spain: Ministry for Education and Science)
MEC Mountain Equipment Co-Op
)

* The flexibility to add the rider at time of issue or at a later date

* The flexibility to use it for deferred compensation, college funding, mortgage protection and acceleration, wealth transfer and as a supplement to retirement income

* When purchased from a mutual life insurance company, possible dividends (although never guaranteed) are usually paid on the amount of insurance in force at the end of the policy year. Thus, dividends from the rider are added to dividends from the policy. To help clarify how a PUA rider can benefit policyowners, here are two hypothetical Hypothetical is an adjective, meaning of or pertaining to a hypothesis. See:
  • Hypothesis
  • Hypothetical
  • Hypothetical (album)
 illustrations. One shows a base whole life policy over 25 years; the other shows the same policy with a PUA rider over the same time frame. You may be surprised what adding this rider can do for your clients.

Sample Case: Sam is a 45-yearold male, preferred non-tobacco, who wants to buy whole life insurance to protect his family. He can afford to pay a total annual premium of $10,000. With a stay-at-home spouse and one child preparing to enter college, he is interested in learning more about the living benefits of whole life insurance. Here's a comparison of what he can expect if he purchases a base whole life insurance policy versus the same base policy with an annual PUA rider.

As you can see from these illustrations, guaranteed net cash value grows more quickly when a PUA rider is added. With the PUA rider, by the third year, the guaranteed net cash value in the policy has increased enough that Sam can access it through a loan to help pay for his daughter's college tuition The examples and perspective in this article may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page.
College tuition
. By the fifth year, the guaranteed net cash value increases to more than four times the annual premium. By the 10th year, total net cash value exceeds total premium paid on the policy that has the PUA, but it doesn't on the base policy.

[ILLUSTRATION OMITTED]

By age 65, the net cash value on the policy with the PUA rider is $50,000 more than on the base policy (as long as prior loans are repaid). At this time, Sam can borrow again from the policy's cash value to supplement his retirement.

Although the guaranteed death benefit is initially generally smaller when a PUA rider is added to a policy, by year 25, it exceeds the guaranteed death benefit of the base policy. Thus, especially for younger clients who want to make use of the living benefits of whole life insurance throughout their lives and still provide for their beneficiaries after their death, a PUA rider can be an extremely useful addition to a whole life policy.

Selling whole life's living benefits

Although most of your clients may understand the death benefits of life insurance, many may not be aware of the living benefits whole life insurance provides. Chief among these is that when the cash value in a whole life policy reaches sufficient levels, policyowners can often access this money through loans and withdrawals of dividends, often without incurring current taxation.

While you're talking to Noun 1. talking to - a lengthy rebuke; "a good lecture was my father's idea of discipline"; "the teacher gave him a talking to"
lecture, speech

rebuke, reprehension, reprimand, reproof, reproval - an act or expression of criticism and censure; "he had to
 your clients about riders, don't forget to remind them about all the guarantees a whole life insurance policy provides, which may include level premiums guaranteed to never increase for the life of the contract; a guaranteed death benefit paid (less any outstanding loans) to the named beneficiary beneficiary

Person or entity (e.g., a charity or estate) that receives a benefit from something (e.g., a trust, life-insurance policy, or contract). A primary beneficiary receives proceeds from a trust or insurance policy before any other.
, income tax free; a policy that is guaranteed not to lapse (language) LAPSE - A single assignment language for the Manchester dataflow machine.

["A Single Assignment Language for Data Flow Computing", J.R.W. Glauert, M.Sc Diss, Victoria U Manchester, 1978].
 as long as the required premium is paid; and guaranteed cash values (and in some cases, non-guaranteed dividends) that can be accessed through loans and withdrawals throughout a policyowner's life.

In addition, most whole life policies include a non-forfeiture of benefits clause that enables policyowners to continue their insurance plan as extended term insurance or reduced paid-up insurance if they decide to stop paying premiums.

It's clear that whole life insurance offers policyowners key benefits, but put one or more riders on the policy--especially a PUA rider--and you may have not only customized the policy, but also maximized its living benefits. That can create a win, win, win situation for a policyowner.

Elizabeth Cicchetti, M.B.A., ACS (Asynchronous Communications Server) See network access server. , FLMI FLMI Fellow, Life Management Institute (life insurance industry accreditation)
FLMI Florida Labor Market Information
, is senior marketing communications Marketing communications (or marcom) are messages and related media used to communicate with a market. Those who practice advertising, branding, direct marketing, graphic design, marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales  specialist at Mutual Trust Financial Group in Oak Brook, Ill. (www.mutualtrust.com). MTL MTL

In currencies, this is the abbreviation for the Maltese Lira.

Notes:
The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion.
 Insurance Company, established in 1904 and the flagship of the group, is known as "The Whole Life Company" because of its leadership in participating whole life insurance. This article is for producer use only.
BASE COVERAGE: HYPOTHETICAL ILLUSTRATION 1 *
ANNUAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $533,512

                            Guaranteed

End of     Age    Annual     Net Cash       Death
Year             Payment       Value       Benefit

   1       46    $10,000        $0        $533,512
   2       47    $10,000      $2,897      $533,512
   3       48    $10,000      $12,692     $533,512
   4       49    $10,000      $22,829     $533,512
   5       50    $10,000      $33,312     $533,512
   10      55    $10,000      $80,027     $533,512
   15      60    $10,000     $130,892     $533,512
   20      65    $10,000     $185,070     $533,512
   25      70    $10,000     $240,774     $533,512

                    Non-Guaranteed

End of      Annual     Net Cash      Death
Year       Dividend      Value       Benefit

   1          $0           $0       $533,512
   2         $363        $3,260     $534,656
   3         $615       $13,682     $536,533
   4         $973       $24,825     $539,408
   5        $1,136      $36,510     $542,655
   10       $2,511      $93,759     $567,006
   15       $4,059      $164,850    $604,918
   20       $6,442      $251,986    $656,237
   25       $8,930      $358,135    $723,844

BASE COVERAGE, PLUS PUA RIDER: HYPOTHETICAL ILLUSTRATION 2 *
ANNUAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $225,205.81

                         Guaranteed

End of   Age   Annual    Net Cash      Death
 Year          Payment     Value      Benefit

  1      46    $10,000     $6,303     $225,206
  2      47    $10,000    $13,926     $245,074
  3      48    $10,000    $24,408     $264,301
  4      49    $10,000    $35,242     $282,911
  5      50    $10,000    $46,439     $300,926
  10     55    $10,000    $103,720    $382,774
  15     60    $10,000    $168,247    $452,868
  20     65    $10,000    $239,408    $513,538
  25     70    $10,000    $315,639    $566,765

                 Non-Guaranteed

End of   Annual     Net Cash     Death
 Year    Dividend     Value     Benefit

  1        $68       $6,371     $225,428
  2        $281      $14,278    $246,183
  3        $459      $25,231    $266,810
  4        $677      $36,768    $287,398
  5        $823      $48,831    $310,095
  10      $1,908    $113,740    $426,429
  15      $3,378    $193,514    $537,091
  20      $5,566    $290,218    $646,753
  25      $8,024    $405,786    $759,980

* Illustrations run on MTL Insurance Company's Covenant II, with
Century II illustration software, version 4.55.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2011 Gale, Cengage Learning. All rights reserved.

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Title Annotation:LIFE PRODUCT RIDERS
Author:Cicchetti, Elizabeth
Publication:Life Insurance Selling
Date:May 1, 2011
Words:1504
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