What exactly is flexible premium survivorship adjustable life insurance?

1. 

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   Jason Goldenzweig

   Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada

   This is more commonly known as a survivorship universal life (SUL) insurance policy - it's different from an individual universal life insurance policy in that the policy insures the lives of two people (usually a husband and wife). The policy proceeds are only paid out upon the death of the second insured.
   
   Many people use this type of policy for estate planning purposes.
   
   If your mother cannot continue to make premium payments or does not want to, she can surrender the policy and take out the cash value (less any surrender charges, outstanding loans, or interest, if applicable).
   
   There is also the option to let it run out on it's own. When you no longer contribute premiums to the policy, it will steadily use up the cash value in the policy to continue the coverage until there is nothing left, at which the point the policy would "crash" on it's own and no longer provide coverage.
   
   The third option is to change the structure of the policy. You may have the option to reduce the face amount of the policy (the death benefit) or reduce the length of coverage to lower the premiums to make the policy more affordable if cost is a concern.
   
   I would suggest your mother contact the agent on the policy and ask them to run midstreams to find out what the current values are on the policy, how long the coverage will go for on the guaranteed side and current assumption side of the program and what changes would it make to the policy given the above options. This will provide a good indication as to what course of action would be most appropriate.
   
   Guaranteed side means how long will the coverage be guaranteed for at the absolute minimum with a given program structure. Current assumption side means how long will the coverage go for given today's values.

   Answered on April 21, 2014

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2. 

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   Robert Bland, CLU

   Founder, CEO, LifeQuotes.com, Darien, IL

   In addition to Jason's excellent advice to meet with the selling agent to find out the detailed workings of the policy, another option is for your mother's children to continue to pay the premiums assuming that they are listed as the beneficiaries.  The policy might be an excellent buy and worth keeping until your mother passes.  And if you can't afford to keep all of that policy in-force, reducing coverage or selling part of the policy to an investor for cash (called "life settlement") is also a viable option worth looking into.  Survivorship policies that are designed to pay only after the 2nd spouse has passed are usually sold in  high amounts and thus are very expensive.  You should definitely educate yourself on what your mother owns and come to know every option open to your family before letting that policy lapse.

   Answered on April 22, 2014

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