Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Cyril Tuohy
Financial advisors looking for wealth preservation and estate planning strategies using survivorship life insurance policies have another option with the launch of a new survivorship life insurance product by Lincoln Financial Group.
Lincoln Wealth Preserve, the company’s first survivorship indexed universal life policy (SIUL), will offer a tax-efficient estate planning strategy while allowing policyholders to accumulate cash and even generate potential income, the company said.
Survivorship life insurance, also called second-to-die life insurance, pays a death benefit only after both people listed on the policy have died. It is a way of insuring two lives on one policy.
The unlimited marital deduction allows assets to pass tax-free to a widow or widower free of federal estate taxes, deferring the estate tax until the death of the surviving spouse.
A survivorship policy delays the benefit payout until the death of the second spouse, when the cash is needed to take care of estate taxes.
Wealth Preserve SIUL offers policyholders a balance between death benefit protection and cash value accumulation, said Andrew Bucklee, head of Lincoln’s Insurance Solutions Distribution.
“The potential for future tax increases can present estate planning and wealth preservation challenges, underscoring the importance of having a solid strategy in place to help reduce the impact on assets,” Bucklee said.
Wealth Preserve SIUL joins Lincoln’s universal life and variable universal life survivorship products.
Lincoln also said that sales of its indexed universal life products have increased 65 percent in the first half of this year compared to the year-ago period. It did not provide exact sales numbers.
In June, American International Group (AIG) announced the launch of Elite Survivor Index II, an SIUL policy with three interest crediting accounts.
“This is permanent life insurance with the potential for cash value accumulation, tax advantages and premium flexibility — and we believe it can serve as an appropriate solution for many family and business needs,” James A. Mallon, president of life insurance, AIG Global Consumer Insurance, said in a statement.
Last year, John Hancock introduced Protection SIUL, also linked to the Standard & Poor's 500 index.
As millions of baby boomers retire after a lifetime of work, many are looking for ways to shelter assets transferred to survivors and heirs.
Boomers, who inherited trillions of dollars from their parents, are in-turn preparing to transfer tens of trillions of dollars to themselves or their children.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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