9 million reduction in cash surrender values
of company-owned life insurance policies due to the significant drop in the stock market during the third quarter.
These arrangements provide limited protection of policy cash surrender values
from declines in the values of the policies' underlying investments.
14 provides: "The cash surrender values
of life insurance policies issued upon the lives of citizens or residents of the state and the proceeds of annuity contracts issued to citizens or residents of the state, upon whatever form, shall not in any case be liable to attachment, garnishment or legal process in favor of any creditor of the person whose life is so insured or of any creditor of the person who is the beneficiary of such annuity contract, unless the insurance policy or annuity contract was effected for the benefit of such creditor.
Considering that cash surrender values
average just 4% of policy face amounts, the decision to recommend a life settlement is an easy one for CPAs advising employers or clients unaware of the potential economic gain from these hidden assets.
Fair valuation of such an option, as well as an accurate assessment of the cash surrender values
, are clearly crucial topics in the management of a life insurance company, both on the solvency and on the competitiveness sides.
The cash surrender values
in the policies are not currently taxable to Taxpayer under Sec.
Compiled by Michael White Associates, LLC (MWA) and sponsored by MullinTBG, The Michael White-MullinTBG BOLI Holdings Report([TM]) measures and benchmarks the cash surrender values
(CSV) of life insurance held by BHCs and banks and their ratios of CSV to capital.
Exercising certain policy features (such as loans, withdrawals, or skipped premiums) may reduce cash surrender values
and death benefits, may have tax implications, and may cause the policy to lapse.
For term policies without cash surrender values
, the purchaser's entire cost is recognized as a loss.
Depending on the state of residence, bankcruptcy exemption laws may protect all, some or none of the cash surrender values
of life insurance policies.
The corporation paid all the premiums and carried the policies' cash surrender values
as an asset on its books, and retained all the incidents of ownership.
Life settlements enable seniors to sell existing life insurance policies for sums that exceed their cash surrender values