'Empire's vision of being Canada's most convenient insurance and investment company is both admirable, and one we can relate to as Canada's Challenger Bank.' Equitable Bank's CSV Line of Credit is currently available to Canadians aged 50 and over who have a whole life insurance policy with a partnered insurer, and adequate cash surrender value
available in their policy to secure a loan.
The cash surrender value
is the sum of money an insurance company pays to a policyholder, or an annuity contract owner in the event that his or her policy is voluntarily terminated before its maturity or an insured event occurs.
Here is an example comparing the taxation pre and post TCJA of a recent life settlement case using the values (rounded for readability) for a $3 million policy sold for $460,000 with a cash surrender value
of $30,000, cumulative premiums of $300,000 and cumulative cost of insurance charges of $300,000.
Accountants frequently recommend life settlements for purposes of estate planning, tax planning, and charitable donation strategies, as they are likely to generate substantially more cash than the cash surrender value
offered by the insurance company.
If the change occurs during the five-year period beginning on the issue date of a traditional life policy (that is, a policy that originally qualified under IRC Section 7702 by satisfying the cash value accumulation test), the recapture ceiling is the excess of the cash surrender value
of the contract immediately before the reduction over the net single premium immediately after the reduction.
In certain cases, the life insurance company issues a Section 7702(g) policy, which freezes the net cash surrender value
available to the policyowner to the lesser of premiums paid or the net cash surrender value
In many states, life insurance contracts' cash surrender value
is exempt from creditors, which can benefit clients at risk of being sued.
The new Modified Cash Surrender Value
rider, available with Executive Variable Universal Life II (Executive VUL II), is geared to employers looking to informally finance their NQDC plans.
(2) Furthermore, a policy owner is generally permitted to borrow from the policy (up to the policy's cash surrender value
) without reducing the death benefit, provided that the loan is repaid prior to the policy owner's death.
* Pay the full account value of the contract on death, as opposed to the cash surrender value
, another benefit that seems to be absent from new annuities being introduced to the market.
Embedded in every whole life policy is a "cash surrender value
"--an amount of cash (which changes over the life of the policy) that can be collected from the policy in the event that the policyholder wishes to terminate coverage and cease premium payments (that is, surrender the policy).
For a transfer of part of the cash surrender value
of an existing annuity contract for a new annuity contract issued by another insurance company, the transfer will qualify for nonrecognition of gain or loss.
Net income for fiscal 2009 also reflected a $34 million pretax charge for a litigation settlement and a $23 million pretax mark-to-market charge to the cash surrender value
of certain life insurance contracts.
In essence, a life settlement is the facilitation of a life insurance policy that sells for less than the face amount of the policy and more than the cash surrender value
, said Brian Staples, former director of life insurance for the Kentucky Department of Insurance and current president of Right LLC, a consulting firm specializing in the secondary market.