Flexible Premiums

C4-L2-P18

Flexible Premiums

In many of today’s policies, once the initial premium has been paid, the amount of additional premiums in the future is flexible or even optional to some degree for the policy owner. Although a recommended or guideline premium exists, the policy owner has the option to pay more premium, less premium, or even skip premiums completely. This is a valuable option for policyowners.

It never should be implied that after the initial premium has been paid, a policy generally will fund itself.

Instead, this feature should be presented as a tool to help clients achieve financial objectives!

Such an objective might the option to suspend premiums temporarily during times of financial stress or high expenses, perhaps when children are in college.

Clients must be informed of the potential consequences of skipping premiums in terms of how this course of action may affect policy values.

This can easily be demonstrated with printed projections using a realistic conservative interest or growth rate.