Paying 7 Payments of a 10 Pay and Stopping

Deepsea

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I am an agent for a career shop.

If I purchased a 10 pay policy and turned the policy into a paid up policy after the 7th payment--- am I right in assuming then that the policy won't MEC ?

Is it a crazy idea to save the 8th, 9th and 10th premiums....if a big reason I am doing the plan is cash value accumulation and not sure if I will want to commit the additional 3 premium payments if I didn't want to.
 
I am an agent for a career shop.

If I purchased a 10 pay policy and turned the policy into a paid up policy after the 7th payment--- am I right in assuming then that the policy won't MEC ?

Is it a crazy idea to save the 8th, 9th and 10th premiums....if a big reason I am doing the plan is cash value accumulation and not sure if I will want to commit the additional 3 premium payments if I didn't want to.

You are contradicting yourself. Your title said that you want to stop payments after the 7th year, right below it you asked if it MECs. It doesn't MEC if you are paying the normal annual premiums for 7 years if you don't add any PUA. I assume you mean if you can APO after the seventh year? If that is the case you need to go back to the illustration to solve for APO. It will tell you based on current dividend projection when you can use the APO.

If you want more cash value, you need to put as much as you can early in the policy period without MECing it to maximize the cash accumulation or pay the last 3 payments on time if you want to do the regular 10 pay.
 
Not interested in APO (additional purchase option)

Just thinking about my future options just in case I run into difficulty fully funding the policy. I would NOT be adding any PUA's other than those PUA'S bought with dividend additions.

I wonder how the compounding of the cash value inside the policy compares----rate wise----if I stop funding after the 7th payment as the policy would be paid up and no further commissions would go to the agent (me)----as I am mostly looking for tax deferred growth of my cash value and an increasing death benefit over time.

But again if I had cash flow issues and could stop fundingOR for financial reasons had to stop finding after 7 years, but then have a paid up policy that didn't MEC....that would make me feel like I had some ok options.
 
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Not interested in APO (additional purchase option)

Just thinking about my future options just in case I run into difficulty fully funding the policy. I would NOT be adding any PUA's other than those PUA'S bought with dividend additions.

I wonder how the compounding of the cash value inside the policy compares----rate wise----if I stop funding after the 7th payment as the policy would be paid up and no further commissions would go to the agent (me)----as I am mostly looking for tax deferred growth of my cash value and an increasing death benefit over time.

But again if I had cash flow issues and could stop fundingOR for financial reasons had to stop finding after 7 years, but then have a paid up policy that didn't MEC....that would make me feel like I had some ok options.

You say you are in a career shop.. Have you asked your GA/manager?
 
Not interested in APO (additional purchase option)

Just thinking about my future options just in case I run into difficulty fully funding the policy. I would NOT be adding any PUA's other than those PUA'S bought with dividend additions.

I wonder how the compounding of the cash value inside the policy compares----rate wise----if I stop funding after the 7th payment as the policy would be paid up and no further commissions would go to the agent (me)----as I am mostly looking for tax deferred growth of my cash value and an increasing death benefit over time.

But again if I had cash flow issues and could stop fundingOR for financial reasons had to stop finding after 7 years, but then have a paid up policy that didn't MEC....that would make me feel like I had some ok options.

APO for me means Alternative Payment Option. You can solve for it using the illustration software. APO is when you use the year's dividends if any, plus the paid up part of the policy if necessary to pay off that year's premium. It's good alternative if you are in a bind and can't or don't want to make the year's premium. Naturally, the CV and the DB will be decreased. I believe Mass call it APO, maybe I am wrong.

If you are not adding any additional premiums to your 10 pay, your policy will not MEC since you are still taking 10 years to paid off the policy. You are getting it confused between the 7 year MEC rule and the APO. At the 7th year , your policy is not "paid up" yet, you still have another three years to go. You can choose to go for APO whenever you want provided, you got enough dividends coming that year or/and paid up CV to offset the year's premium outlay.

Again, go back to the software and you can calculate if you decide to go APO on the 7th year to see if you will have enough to offset the remaining 3 years. If not, you might have to wait until the 8th or 9th year. It is a projection, you won't know for for sure until you want to do an APO and ask for an inforce illustration later. Not sure if this answers your question, but to summarize it:

No MEC if you are not adding additional outside premium and yes you can use alternative means to paid off the policy whenever you want; as long as the policy has enough paid up CV or dividends coming in to offset the year's premium outlay.
 
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I am thinking of just paying 7 payments and then just converting it to a paid up policy.

At that point the cash value shouldnt decrease and will only increase from that point.

And while the DB will be reduced it will then increase from that point over time.

Right on both accounts ?
 
I am thinking of just paying 7 payments and then just converting it to a paid up policy.

At that point the cash value shouldnt decrease and will only increase from that point.

And while the DB will be reduced it will then increase from that point over time.

Right on both accounts ?

Yes if you choose the paid up additional option for the dividends, if any.
 
I am thinking of just paying 7 payments and then just converting it to a paid up policy.

At that point the cash value shouldnt decrease and will only increase from that point.

And while the DB will be reduced it will then increase from that point over time.

Right on both accounts ?


Lowering the DB significantly in the first 15 years could violate DEFRA. Meaning it would no longer be consider a Life Insurance Contract

You will need to work with the internal reps to find the lowest DB that does not violate DEFRA. That may, or may not be the amount you want to lower it to.
 
Lowering the DB significantly in the first 15 years could violate DEFRA. Meaning it would no longer be consider a Life Insurance Contract

You will need to work with the internal reps to find the lowest DB that does not violate DEFRA. That may, or may not be the amount you want to lower it to.

The 10 pay is a whole life policy.
 
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