Life Insurance Agents' Ethics or Code of Conduct

[Guest]

Hello,

I have been doing a ton of reading on Missed Fortune.

Just out of idle curiosity, I thought (maybe I dreamed it up) that it was either illegal or unethical for a life insurance agent to suggest an LI contract as an option to evade income taxes. I think I may have come to this conclusion when Prudential got itself in a jam in Florida getting retirees to cash in their WL policies in exchange for annuities (this was years ago).

The more I read about this topic on the internet, I note that there are agencies that specifically advertise as helping to implement the doctrine aspoused in Missed Fortune. That is why I am wondering if I dreampt it up or if they posess some sort of license such as financial consultant or something in addition to being LI Agents.

Thanks.

 

[somarco]

Agents have to be extremely careful in presenting any life product as an "investment".

Beyond that, tax evasion is illegal.

Tax avoidance is not.

 

[Guest]

Agents have to be extremely careful in presenting any life product as an "investment".

Beyond that, tax evasion is illegal.

Tax avoidance is not.

Dang! I am very sorry. I did not in any way wish to suggest evasion. I was using the word strictly as a synonym with "avoidance." In any event as something perfectly open and above board. My apologies.

Thanks Somarco

 

[Dave020]

I thinks it's a standard 1035 exchange of cash value from one vehicle to another and is legal as long as the agent can demonstrate that it is a better fit for the client (in the client's best interest).

CV buildup in life insurance is in conjunction with a death benefit, if the need for that large a DB no longer exists, it may be appropriate to move the client into an annuity and create an income stream with settlement options.

Dave

 

[somarco]

Unless the rules have changed, I don't believe life insurance to annuity qualifies under Section 1035.

 

[Airborne1]

1035 exchanges

Unless the rules have changed, I don't believe life insurance to annuity qualifies under Section 1035.

Not true

1035 permissability

LI to Annuity - okay
LI to LI - okay
Annuity to Annuity - okay
Annuity to LI - NOT ALLOWED

 

[somarco]

Since I don't write much life, never have, I will concede the point. Just going on memory, which is not what it used to be. Especially short term memory.

Since I don't write much life, never have, I will concede the point. Just going on memory, which is not what it used to be. Especially short term memory.

Since I don't write much life, never have, I will concede the point. Just going on memory, which is not what it used to be. Especially short term memory.

 

[arnguy]

Airborne1 is 100% correct. It is the exchange of an annuity to life insurance that is prohibited. That would result in the total avoidance of taxes on the income produced inside the annuity (or evasion, if you prefer). Uncle Sam ain't gonna let that happen.

 

[Guest]

Can someone do this on a 1035

From VUL to UL

From VUL to WL

Thanks.

 

[Airborne1]

VUL to UL or VUL to WL

Yes, of course.

The real question would be why would you even consider it to begin with.

More postings to come on Missed Fortune, since I'm snowed in today.