Tax on the "inside buildup" of cash surrender values
generally is not deferred in the case of contracts issued after December 31, 1984, that do not meet the statutory definition of a "life insurance contract.
The second option, assuming the client gets approved for new coverage, would be to transfer the cash surrender values
into a new policy using section 1035, with a death benefit of equal value (or $60 million).
He further stipulates in the legislation that every company issuing life insurance policies for delivery in New York state which contain cash surrender value
and which provide to the policy owner a notification of premium due shall set forth in such notification that the policy contains a cash surrender value
and that further information, including the amount of such cash surrender value
, shall be available from the insurer upon written request from the policyowner.
When it is intended to surrender a universal life policy value during the normal operating cycle, the surrender values
might be carried on the balance sheet as a "Current Asset," as opposed to a "Noncurrent Asset.
Most CAUL products have no secondary guarantee premiums and will only stay in force as long as cash surrender values
are sufficient to cover the monthly charges and costs of insurance.
Unearned premiums (prepaid insurance) are classified as part of "working capital,"3 but cash surrender values
The market is so buoyant almost any policy with a surrender value
above pounds 2,500 finds a buyer.
The practice has become widespread: the Life Settlement Institute reported last April that to date, life settlements have paid life insurance policy owners an aggregate of more than $1 billion over surrender value
for their policies.
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.
In a survey of 100 funds the company found that in 71 cases surrender values
after deducting penalties were worth at least ten per cent more than the underlying fund value.
Many policies could be sold for a higher figure - on average 15 per cent more - than their surrender value
Despite the market significance of universal life, almost no information exists about the actual determinants of universal life surrender values