- 11,471
No, you can withdraw any available cash value. It may not make sense to do it that way, but any cash value, whether it was part of the base policy premium schedule or PUAR, doesn't matter, you can withdraw it.
Whole life cash value automatically adjusts in high interest rate environment?
- Thread starter newbie2
- Start date
No, you can withdraw any available cash value. It may not make sense to do it that way, but any cash value, whether it was part of the base policy premium schedule or PUAR, doesn't matter, you can withdraw it.
- 4,908
interesting, how does the base policy stay inforce & build cash value equal to face at maturity (age 100/120) if you withdraw part of the base cash value?
or, are you saying the carrier will allow the client to do a partial face reduction of the base WL policy & defacto get a partial withdrawal of base cash value?
I am more familiar with a full surrender of cash value to end the entire policy or a partial face reduction that would trigger a new policy face page & death benefit------but some of those WL face reductions are not contractual & may only be offered as an administrative offering on some versions of products
- 11,471
It won't.
That's what will happen. Plus, being able to restore the policy back to what it was originally illustrated... will be a challenge, if it can be done at all (probably not).
Like many things in life, just because you can, doesn't mean you should... but you can.
Lloyds of Lubbock
Guru
- 747
You cannot withdraw guaranteed cash value.
You can reduce the face to create adds but guaranted values cannot be withdrawn, they can only be loaned against
- 4,908
Do most WL carriers contractually state in the policy that you can do a face reduction to the whole life policy?
Lloyds of Lubbock
Guru
- 747
A loan is far better than a withdrawal particularly for non-direct recognition policies. If direct recognition, then a withdrawal to basis then loans is the preferred method.
Direct recognition policies are currently paying a bigger dividends on loaned values than non loaned dividends. If interest rates keep going up variable loan interest rates may end up higher than your div crediting rate.
I resent your tone and insinuation regarding "icing on the cake". Makes me wonder why I'm bothering to respond other than the fact that I can.
Why would you resent my tone? It was not directed at you. ONAT ratings had been going down for years, they created a mess with renewals on annuities and their dividend was falling. The fact that they demutualized and reduced their dividends drastically has something to do with you?
Direct recognition policies are currently paying a bigger dividends on loaned values than non loaned dividends. If interest rates keep going up variable loan interest rates may end up higher than your div crediting rate.
I resent your tone and insinuation regarding "icing on the cake". Makes me wonder why I'm bothering to respond other than the fact that I can.
Why would you resent my tone? It was not directed at you. ONAT ratings had been going down for years, they created a mess with renewals on annuities and their dividend was falling. The fact that they demutualized and reduced their dividends drastically has something to do with you?
- 4,908
Is the face reduction stated in policy?
Won't a face reduction/withdrawal of base CV possibly cause entire policy to MEC & cause restart tamra/tefra/defrag, etc calculations?
- 11,471
I feel that I've been targeted and having to defend our strategies and previous company selection for so long that I feel emotionally raw about it. I probably shouldn't but I do.
I apologize.
- 11,471
Let me ask a comparable question in a different way with a different product:
If you had an annuity with a guaranteed lifetime withdrawal feature for 5% (just making up a number) and you pull out more than 5% in any given year... does the policy reflect that you can do that? (Actually it does because you can take the withdrawal. Over 5% but under 10% of the free withdrawal amount means you can without a surrender charge, but your lifetime benefits will be recalculated. If you take out over 10%, the amount over 10% will be subject to a surrender charge.)
Is the re-calculation of benefits stated in the annuity policy? No.
Will a re-calculation happen? Yes.
Would it be stated in the policy that a recalculation would happen? Yes.
Will it be for the policyholder's advantage? Most certainly not.
So, using that analogy, we can do the same with whole life insurance.
Can you make a withdrawal of available cash values? Yes and at any time.
Will it create a re-calculation (reduction) of death benefits? Yes.
Do we know how much the re-calculation will be? No.
Is it for the benefit of the beneficiaries? Most certainly not.
- 11,471
As it should be.
Insurance companies should be profiting from loan values as they should be an investment and cash flow on the books for the general investment account.
But there should be a disincentive from borrowing. Dividend crediting SHOULD be LESS than loan rates.
It doesn't negate the use of using life insurance nor using it as a source of cash flow in retirement. For retirement, it's about the volume of interest/dividends earned vs the volume of loan balance and loan interest paid from the policy.
