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All the replies are right on the mark. Sounds like an Option 1 UL you're dealing with. Prospect can't properly overfund an Option 1 because the face includes the CV, just like with WL.
When you write the individual policy because of the high total cost from adding up the renewal rates, use an Option 2 UL -- and then the voluntary overfunding ratio should be 6-7 times the minimum premium depending on the product. You can overfund to Guideline Level. Just be sure it doesn't MEC.
Customer owns the money with UL, not the insurance company like with WL. He gets the money back by first withdrawing to basis, and then borrowing. Everything is tax-free, including return of all the interest ever earned through loans (transfer of capital, not earned income). So, be sure the new policy has a zero net-cost wash loan, and not a net or gross loan.
At age 36 there's a lot of time value for money to grow. Otherwise, years later, customer can put in all the money at once they didn't put in years earlier. Overfunding a UL is not like a "use it or lose it" Qualified Plan.
If the prospect is funding a 401(k) beyond the employer match, all the more reason to get the individually-owned UL. It will give them about twice the spendable income later. You have some huge buyer benefits that should make replacing the Group UL pretty easy.
Good selling!
atlantainsguy
When you write the individual policy because of the high total cost from adding up the renewal rates, use an Option 2 UL -- and then the voluntary overfunding ratio should be 6-7 times the minimum premium depending on the product. You can overfund to Guideline Level. Just be sure it doesn't MEC.
Customer owns the money with UL, not the insurance company like with WL. He gets the money back by first withdrawing to basis, and then borrowing. Everything is tax-free, including return of all the interest ever earned through loans (transfer of capital, not earned income). So, be sure the new policy has a zero net-cost wash loan, and not a net or gross loan.
At age 36 there's a lot of time value for money to grow. Otherwise, years later, customer can put in all the money at once they didn't put in years earlier. Overfunding a UL is not like a "use it or lose it" Qualified Plan.
If the prospect is funding a 401(k) beyond the employer match, all the more reason to get the individually-owned UL. It will give them about twice the spendable income later. You have some huge buyer benefits that should make replacing the Group UL pretty easy.
Good selling!
atlantainsguy
