Q.Doesn’t the last exam­ple, pay­ing full PUA and base to age 70 and beyond, become a MEC?

A. No. PUA is paid up insurance so you are buying one time paid up death benefit which also generates cash value with the correct ratio that follows the MEC guidelines within your policy design. The company I use does an automatic MEC test on every illustration and so all illustrations that I show are MEC tested. You can only pay PUA rider till age 75 now though. It used to be age 80 when I started. I do not know of any other company that has the auto MEC test feature. Usually the client would have to ask for that. Most agents do not tell the client about that because the policy designs shown look better than what is actually possible with the MEC test revealed.
It is the added Term Rider that makes a policy most likely to MEC in the future, which is why I never add a Term Rider to a policy. It is just too much for most clients to deal with the surprises created when the Term ends and is dropped or if they continue paying Term it becomes annual renewable the cost of which increases every year. I prefer to keep the policy design the same today as it will be 50 or 100 years from now. You know what you are getting on day one. Once that Term is removed, all the death benefit it was buying also disappears. Don’t let anyone tell you that the design of the policy is such that the dividends will pay for the Term which will convert to WL over the life of the policy and all that type of talk. I can tell you from experience that that is NOT a beneficial policy design. Policies designed for banking are meant to be safe, secure, predictable and designed right up to the MEC limit for maximum benefit to the client. That is what we do at Debt Diagnosis.

Q. At what point is it nec­es­sary to open a new branch (pol­icy)?

A. This question does not have a blanket answer because it depends on the clients entire financial position. We look at every aspect including where the money is leaking out their lives unknowingly and unnecessarily. It also depends on how well they have understood how to use the policy as a financing system to flow their cash through. You can take a horse to water but you cannot make him drink. Some clients put in the time and effort necessary to completely understand how to utilize their system to the fullest and others do not. Business owners are the best clients and reap the most rewards, however, savvy family members that are not business owners do also, if they are willing to listen, learn and actually practice what we advice them.
Obviously, the short answer though is, when there is enough money and one knows how to play the game of moving money from here to there it is a beautiful system. And when it is understood that multiple family members need to take part in their own family system for legacy benefits to be fully utilized, it is more than a beautiful thing, it is an awesome thing.

This leads on to the next question.…
Q. Is it bet­ter to have mul­ti­ple smaller poli­cies or few larger ones?? .…how many family members or business owners etc. are involved?

A. Once again, each situation is unique. No blanket answer for this. But, as a general place to start I would suggest the bread winner be well covered first. If there is more than one bread winner, then all should be covered. Why would the beneficiaries need coverage? Because they need somewhere to put the proceeds and need to understand the entire concept so it can pass on generationally. Everyone needs their own financing system at some point during their life and somewhere to park their money that is safe, protected, guaranteed not to be lost and guaranteed to grow.

If you are talking about one unmarried, rich person, with no one they want to leave their money to, then it also depends on how much tracking they are prepared to do. One big one until they have so much money that they cannot possibly find a place to put it because they easily come up with the premium every year and have no outstanding loans etc. then maybe they would open another one. There are too many scenarios though. This person would want all loans paid off before retirement so they have a lot of money to continue their current lifestyle.

I personally track every part of each of our policies. We have 6. My husband has two, I have one and my three sons have one each. Once I can not only pay off all or most of the loans each year and have enough to pay for next years premium easily, by the time the premium is due, I might add another policy. We have opened one a year for three years for ourselves and my three sons have opened them over Christmas time because helping them with the premiums is a great Christmas present, I believe. Teaching them how to manage and multi-task their money is rewarding and takes a weight off our shoulders.

Before my son bought a computer, after he saved the money for it, we bought a policy where the cash value available equaled the price of the computer. For his birthday, we covered the other portion of the premium. He uses his small income from his online business to pay off the computer loan and that also covers the next years premium. And so on. Christmas and birthday gifts are loan or premium help payments. Scholarships from the college become premium payments before they are spent etc. It is all about how you move your money.

We can see in Nelson’s book, Becoming Your Own Banker, how the premiums are paid for with the actual loan repayments. Once you understand how it all flows, you get it, and you just can’t believe the beauty of it. But, if you are not tracking what you are doing properly, and you don’t have a policy designed properly, how can you know how to move your money for the most benefit.

I use a software program to help me see the whole picture with each and every policy and all our accounts in one place. (http://debtdiagnosis.com/category/debt-elimination/act-software-overview/)
I sell this software for $1,500 less than anywhere else because I am selling to my IBC clients for their tracking benefit, not for my pocket so much.

It also depends on whether you are trying to protect the insurability of loved ones or have a huge legacy to leave multiple people or one person etc. Too many differences of goals for one answer.

People who have a lot of debt should definitely start a policy, before they pay off the debt. Why? Because they can multitask their money by having it pay for premiums before they take a loan to pay off the debt. In essence they are refinancing their debts into their own financing system that way. Do not have them pay off their debt and then begin their policy. This of course also depends their entire financial position though. Some people are just too far under to be able to help.

Hope these answers are of use.

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I am a member of some financial communities. I came across your website: debtdiagnosis.com and found it very informative and helpful. I would like to send you an article as a guest post (relevant to your site).

It will be my pleasure if I can contribute some quality content. Please kindly let me know how and where should I send you the article.

Waiting for your quick response.

Thanks and regards,
Nancy Smith.
nancysmith008(at)gmail(dot)com