A commission on a traditional policy may be as high as 120 percent of the first year premium; PPLI commissions tend to range from 0.2 percent to 0.5 of
cash surrender value. (27) When evaluating the costs of structuring PPLI, the purchaser must also be sensitive to various taxes imposed on the purchase of life insurance.
Initially, no
cash surrender value accrues--similar to what happens in the whole life policy scenario given earlier.
This kept the
cash surrender values from increasing, which limited the amount of life insurance that could be purchased from the cash value.
Regions Bank of Birmingham, Ala., for one, had at the end of 2009 a
cash surrender value of $2.42 billion, double what it had at the end of 2006 and up from zero a year prior to that.
In the case of policies where notification of premium due is not required, the notification of
cash surrender value shall apply in cases where the insurer voluntarily sends a notice of premium due.
Still, the life insurance value of an insured's life is, in some sense, his (or her) property: he can pass it on to the next generation by paying the premiums and letting the policy "mature" upon his death, or he can use it as a current asset by taking advantage of his insurability through
cash surrender value or by sale of the policy.
A life settlement turns insurance assets into cash, giving the original policyholder an amount greater than the
cash surrender value in exchange for ownership of the policy.
When an institution is planning to acquire BOLI that will result in an aggregate
cash surrender value in excess of 25 percent of its tier 1 capital plus the allowance for loan and lease losses, the agencies expect the institution to obtain the approval of its board of directors or its designated board committee.