Choosing The Right Insurance Company: How Flexible is Your PUA Rider? | IBC Global

TL;DR

This video explores the specific rules and limitations of different life insurance companies regarding their paid-up additions (PUA) Rider, which is important for maximizing cash value.

Transcript

Alright in this video we are going to provide awareness on different life insurance companies and their PUA limitations. In our last video we touched on how to design a policy for maximum cash value and really where your money is going so you can decide where your money goes between the premium or PUA Rider and how really to juice that cash value u... Read More

Key Insights

• 🏢 MassMutual has a maximum 10/90 split for PUA limitations, meaning the lowest base premium they allow is 10% of the total desired payment. Catch-up payments and 1035 exchanges have their own exceptions.
• 🔢 Guardian allows a 10X base premium for PUAs as long as a one-year term Rider is attached. They also have a first-year excess limit of up to 50 times the base premium. Guardian offers flexibility in adding PUAs at leisure.
• 🚪 New York Life allows PUAs to be added at leisure, but as time passes, the multiple of the base premium gradually reduces. They refer to their PUA Rider as their OPP Rider.
• 💼 Lafayette Life does not have a multiplier for PUA payments. Instead, they have a maximum annual PUA payment of $500,000, which can be subject to medical underwriting if exceeded. The lowest base premium they offer is around 3.5%.
• 🏛️ Penn Mutual allows a 10X base premium for PUAs and offers two PUA Riders: the enhanced paid-up additions Rider and the accelerated paid-up additions Rider. They have an annual payment limit that requires 50% of the annual payment to be paid over 5 years.

Questions & Answers

Q: What is the maximum PUA split for MassMutual?

MassMutual allows a maximum PUA split of 10/90, with the lowest base premium set at 10% of the total desired payment.

Q: What are the limitations on PUA payments for Lafayette Life?

Lafayette Life allows a maximum annual PUA payment of $500,000. Anything higher than that is subject to medical underwriting approval.

Q: How do New York Life's PUA limitations change over time?

New York Life's PUA limitations become more restrictive as time passes. While it starts with 10X the base premium, the maximum gradually reduces based on the number of years the policy has been active.

Q: What are the options for PUA Riders with Penn Mutual?

Penn Mutual offers enhanced and accelerated PUA Riders. The enhanced PUA Rider is suitable for long-term funding, while the accelerated PUA Rider is more appropriate for shorter funding periods.

Summary & Key Takeaways

• MassMutual: Maximum PUA split is 10/90, with the lowest base premium set at 10% of the total payment. Exceptions include catch-up payments and 1035 exchanges.

• Guardian: Can pay up to 10X the base premium into PUAs with a one-year term Rider. Without the Rider, the maximum is 3X the base premium.

• New York Life: PUA limitations become more restrictive as time passes. Starts with 10X the base premium and gradually reduces over time.

• Lafayette Life: No specific percentage minimum for the base premium, but the maximum PUA payment is $500,000 per year. The 7-year average limits PUA payments in subsequent years.

• Penn Mutual: Allows 10X the base premium for PUAs, with different options for enhanced and accelerated PUA Riders. Has a 5-year window for meeting 50% of the annual payment limit.