Essentially, a paid-up addition is an
additional death benefit (also with cash value) that is purchased in conjunction with a whole life policy (either with dividends or through additional premium payments).
However, due to the martingale property of the fund process and the fee deducted from the account value, the expected value of the
additional death benefit is never greater than the withdrawal amount.
Benefits include: A $500,00 accidental death benefit; up to $250,000 in excess medical coverage; up to $50,000 benefit for mental health counseling; disability income coverage; plus an
additional death benefit for the donor's travel companion.
Available term riders provide an
additional death benefit during the first four policy years, while a policy split option rider can be used in the event of divorce or tax law changes.
Also found in many last survivor policies is an estate protection rider that pays an
additional death benefit if both insureds die within four years of purchasing the policy.
This rider pays an
additional death benefit if the insured dies as a result of an accident before age 70--in effect, doubling the amount of coverage.
If the client dies 10 years after initiating the policy, the policy face amount will have grown to $11.5 million, leaving a net of $10 million after using the $1.5 million
additional death benefit to retire the policy loan.
The beneficiary receives an
additional death benefit equal to 40% of the earnings accumulated up to age 69.
This rider pays an
additional death benefit if the insured dies as a result of an accident before age 70 -- in effect, doubling the amount of coverage.
If your client is looking for cost savings, you may be able to provide the same or
additional death benefit with lower or no additional premiums.
Michele Van Leer, vice president and general manager of individual insurance at SunLife Financial, Wellesley, Mass., says the company now offers on its policies a charitable giving benefit rider that will pay a 1%
additional death benefit to a named charity.
While DBO plans are not the most cost-effective death benefit for the executive, they can provide an
additional death benefit at no current cost to the employee.
