Aboutleboyd Expertise I can answer questions relating to life insurance, estate planning, business succession/continuity planning and tax-effecient retirement planning. I have advised clients for many years on these areas, and how they relate to life insurance.
Likewise, I have worked with many on Long-Term Care needs.
Experience I have been a top producer for the past 5 years. Prior to that I was the CEO of an international company, having the concerns from a clients perspective (now having been a client of NYL for more than 15 years)
Organizations Society of Financial Services Professional
Million Dollar Round Table
Education/Credentials In addition to an BBA and an MBA from a top-10 school. I have earned the LUTCF, NASD Series 6, 7, 63 and 66 licenses.
Awards and Honors Top Life Producer
Top Long-Term Care Producer
Question Hi, I was wondering if you knew what a "advanced premium deposit fund" is?
My mother found an old policy she had forgotten about. She paid on starting back in the 70's. The company is a life insurance company and has been acquired a couple of times since I guess I'd have to do some research to contact them.
Thanks
Answer Jackson,
An advanced premium deposit fund is basically a deposit into the company's low-interest, guaranteed fund which they then use to pay the premiums in future years.
There are generally two reasons people choose to do this, and one is for policies issued since 1988. Since your mom's policy is much older than that, there is only one reason to do it. When you pay premiums to a permanent life insurance policy it actually increase not only the cash value, but also the death benefit (for example, if the policy was originally a $10,000 policy you will see that the current death benefit is higher than that). Because it increases the death benefit after the policy is 2 or 3 years old the company doesn't allow you to add "additional" premiums in a given year. With the additional premium the death benefit increase more than 1x the additional premium (hence more exposure to the insurance company). Since there's no additional underwriting, you can see that if someone was terminally ill they could take all of their savings and pay additional premiums thereby increasing the amount of money left to their heirs.
Therefore, when someone wants to pay additional premiums, they deposit the additional amount into the account and then draw it every year.
