Case Study: The Importance of Policy Review
THE CLIENT
Robert is a recently widowed 63 year old doctor with a large medial practice. He is planning on working for another 5 years. Robert’s net worth is currently $20,000,000. He reached out to his financial professional, Steve, to discuss his wealth plan and the best strategy for investing the proceeds from his deceased wife’s life insurance policy. Steve realized the importance of reviewing his clients existing insurance policies as part of this process.
THE CONVERSATION
Robert had purchased a $4,000,000 whole life policy 14 years prior when his kids were young and his practice was growing. The policy had $1,200,000 cash surrender value with a $350,000 gain. Robert was frustrated because expected 10 premiums of $58,000, but as a result of a decrease dividend, he had been repeatedly advised to pay for a “few more years.” OWR partnered with Steve to present Robert a number of alternatives including a similar premium with no additional premiums.
THE SOLUTION
OWR helped Robert obtain a $5,100,000 death benefit guaranteed forever using a tax-free 1035 exchange of the $1.2M and 5-premiums of $58,000. Robert decided to pay premiums while working to increase his death benefit, with the certainty of no unexpected future costs. As a result, Robert decided to use a portion of the proceeds (and his lifetime exemption) from his wife’s policy to purchase an additional $5,000,000 policy for the benefit of his children.
