Frequently Asked Questions
Is there a limit to how much premium can be put in to a policy?
Yes, there is a limit to how much premium can be put into the account value in the first 7 years for the policy to retain all its tax advantages. If premiums exceed 7-year IRS guidelines (which vary by age and gender of the insured and must be calculated by the insurance company) a Modified Endowment Contract (MEC) is created. While a MEC still offers a tax-free death benefit and tax-deferred growth potential, there are income tax implications if the policy owner borrows or withdraws from or surrenders they policy. The policy owner may also experience a 10% tax penalty on any gains distributed prior to age 59 1/2.
Are there other tests to make sure my policy retains the tax advantages of a life insurance policy?
Yes, there are two alternative tests for determining whether a policy meets the requirements to qualify as a life insurance contract. The test selected can have a significant impact on premiums, cash surrender values and death benefits.
The Cash Value Accumulation Test (CVAT) limits the account value relative to the death benefit. The Guideline Premium Test (GPT) limits the premiums paid relative to the death benefit. Generally, the GPT offers more long-term premium flexibility and lower cost of insurance charges over a long period of time. CVAT offers a higher death benefit at life expectancy (but GPT offers higher death benefits at other ages).
Can the amount of coverage be changed after the policy is issued?
Yes, the policy owner can change the death benefit as needs change. Death benefit increases may also require new medical information and for a limited number of issue ages, genders, rate classes will be subject to a monthly specified amount charge. Decreases are permitted except during the first policy year and the first 12 policy months after the effective date of an increase. The minimum base policy specified amount that must remain after a decrease is $50,000.
Which death benefit option is best for my client?
If there is a need for a level death benefit and the objective is to keep the premium required to maintain the policy as low as possible, then Option A may be the most suitable choice. If the objective is to have any favorable investment performance and increase in account value be reflected in an increased death benefit, then Option B may be the best choice. Option C is used most often in business insurance situations where there is a need for a death benefit equal to the initial amount plus cumulative net premium.
Will this policy last a lifetime?
This policy is designed to provide lifetime protection. However, insufficient premium, poor investment returns, higher policy costs, or excessive loans and withdrawals could cause the policy to lapse. We encourage you to use the regular reports your client will receive to help them monitor the policy's value.
How can I keep track of my client's policy values?
If you have proper authorization signed by your client, you and your client will receive regular statements regarding the progress of the policy each time a premium payment is received or when a partial withdrawal, loan, investment portfolio transfer or other change occurs. In addition, you and your client will receive quarterly statements of current policy values, including a breakdown by investment option and annually you will receive a report detailing the past year's activity. You can also check on the current value of the investment options and review policy benefits by signing on to our secure platform via the link on the home page.
What happens when my client applies for a policy?
When we receive the application, an Ameritas associate will contact the proposed insured and ask for additional information about health and family history. The associate will arrange a time for a trained medical professional to come to their home or office to gather weight, height, heart rate and blood pressure information and collect a sample of blood and urine. We will notify you when your client's application has been approved and prior to our mailing the policy.
What happens when the policy is issued?
When your clients receives the policy, they have a ten-day "free look" period. During this time, any initial premium is allocated to the Vanguard Money Market Portfolio. If the policy is returned within the "free look" period, all monies are refunded to the applicant. Assuming the policy is not returned, after thirteen days from the issue date, the premium is allocated according to the instructions received on the application..
The Ameritas Advisor VUL insurance policy (Form 4051) is issued by Ameritas Life Insurance Corp. and underwritten by affiliate Ameritas Investment Corp. Variable products have investment risk, including the possible loss of principal. Before investing, carefully consider the investment objectives, risks, charges, expenses and other important information about the policy issuer and underlying investment options. This information can be found in the policy and investment option prospectuses, which are available on this web site. Please read the prospectuses carefully before investing or sending money.
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