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To follow are profiles of some recent cases Katt & Company has been involved with.

JB

 

Several years ago I was retained as an expert witness in a vanishing premium case. It was settled on JB's terms. The family then had me do a major review and begin management of a large portfolio of life insurance consisting of seven policies. Two policies had significant problems so they were terminated with the surrender values used to repay a loan on a top performing policy. A year later the family sold their business and I was instructed to revise the portfolio so they could maintain the maximum life insurance with one-third the previous premium budget. This was done by terminating a policy with weak pricing and shortening the length of time to fund two others, but well within the insured's life expectancy. I will continue to review and manage the life insurance policies for the JB family.

 

MB

 

Through MB's attorney I was hired to review a policy replacement recommendation made by the corporate trustee of MB's trust (where have the fiduciary requirements gone?). The existing policy is VUL with increasing death benefits. There is a low probability that this policy can be sustained due to the volatility of equity sub-account results. This was confirmed by doing a Monte Carlo study. In fact, this policy purchased in 1996 has less cash value than the premiums paid. MB wishes to stop paying premiums. My analysis provided four options, including retaining some of the VUL. MB's trust decided on replacing half of the VUL with a level death benefit UL with no lapse rider, one-fourth with an increasing death benefit participating whole life policy and retaining one-fourth of the VUL but with a special design to protect against potential problems with equity volatility. No additional premiums are expected. Wholesale versions of the new life insurance are being used to provide huge savings. When the policies are in place I will review them annually.

 

Dr. TW

 

Forty-something physician. He had expensive term, especially considering that his waiver of premium was 23% of the actual premium. I improved his term costs and extended the coverage. He also wished to use whole life for dual purpose of family protection and tax-deferred cash build-up. We did this off from his budget and used the smallest amount of whole life so the policy would emphasize the cash value build up. The whole life policy was designed with minimum selling expenses.

 

LD

 

LD's attorney referred me. An agent recommended her policy be replaced. While her UL policy was underfunded and overpriced the policy the agent recommended wasn't much better and it had dismal financial strength ratings. I recommended a top rated company with excellent pricing using its wholesale design. LD decided to reduce the death benefits. The target premiums were substantially reduced due to much better pricing and a better amount of coverage considering her children were grown and likelihood that the estate tax credits would be going up.

 

 

 

 


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Phone: 269.372.3497 • Fax: 269.372.4681
Email: PKatt@PeterKatt.com