- 10,687
Easy. The Rider is triggered. Cut and Dry.
Loan protection WL vs IUL
- Thread starter Adam864754
- Start date
Easy. The Rider is triggered. Cut and Dry.
- 10,687
There is nothing to Grandfather because there is no change to the law. Only a Determination on the existing law.
Riders that have been triggered already might be granted an IRS EXEMPTION. But there is no legal avenue to Grandfather this as it is not a clarified law.
Now if the IRS determined them to be valid... and then Congress changed the law to make them invalid... THEN the prior policies would likely be Grandfathered in.
But you cant grandfather a policy provision the IRS Determines to be invalid under current law.
- 10,687
Since its a snow day here and I have extra time on my hands, here is the disclosure used in the SEC Filing of National Lifes VUL:
"Overloan Protection Rider. Anyone contemplating the purchase of the Policy with the overloan protection rider should be aware that the tax consequences of the overloan protection rider have not been ruled on by the IRS or the courts and it is possible that the IRS could assert that the outstanding loan balance should be treated as a taxable distribution when the overloan protection rider causes the Policy to be converted into a fixed Policy. You should consult a tax adviser as to the tax risks associated with the overloan protection rider. See Appendix F for more information about the rider."
There they are specifically stating that the "fixed" DB the OPR provides could potentially be considered a "triggering event" if the IRS were to ever make an official Determination on this.
"Overloan Protection Rider. Anyone contemplating the purchase of the Policy with the overloan protection rider should be aware that the tax consequences of the overloan protection rider have not been ruled on by the IRS or the courts and it is possible that the IRS could assert that the outstanding loan balance should be treated as a taxable distribution when the overloan protection rider causes the Policy to be converted into a fixed Policy. You should consult a tax adviser as to the tax risks associated with the overloan protection rider. See Appendix F for more information about the rider."
There they are specifically stating that the "fixed" DB the OPR provides could potentially be considered a "triggering event" if the IRS were to ever make an official Determination on this.
- 11,450
THAT would certainly be a material change to the policy!
Interesting!
Interesting!
- 10,687
With that same line of thinking, a new 7-year period for MEC purposes as well would be a possibility.... and if its a NDR Loan and the Loan is still part of the CV.... it could possibly trigger MEC status maybe?
- 11,450
We're getting a bit beyond my paygrade on that one... I certainly wouldn't know.
A book was recently recommended to me: Life Insurance 10x by Lawrence J. Rybka, JD, CFP. John Ocweija said that it's a tough read, so I'll probably pick it up and get more into contract economics.
Life Insurance 10X – ValMark Financial Group
A book was recently recommended to me: Life Insurance 10x by Lawrence J. Rybka, JD, CFP. John Ocweija said that it's a tough read, so I'll probably pick it up and get more into contract economics.
Life Insurance 10X – ValMark Financial Group
- 10,687
Same here. Just pontificating at this point. Thanks for the book recommendation!
Wilardlomaso
New Member
- 1
I have heard that WL would be the best option out of the ones you have described, but it is also important to consider the site you take your loans from and their rules. I am sure it would be best to consult their manager before taking any actions and letting them give you the best option. I am sure that only specialists know how to do the work the best. The company https://kviklanet.dk/ gave me all of the information I needed when I took my loans from them, so I am rue that any other company that respects itself and its clients must give them orientation towards their loan protection. Good luck!
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