Hi - I am in the life insurance business. I am always looking at prospects current policies to see if it warrants replacement. While premium for death benefit is obvious (eg if I can get them 20% more death benefit for the same premium, it makes sense to switch), the critical question for some is what benefits exist in their actually using their current cash value to bring down the premium on the new policy. For example. Prospect a is has a 1mm policy that has a cash value of 36k but a cash surrender value (what we d call the 1035 exchange value) of 20k. They pay 1k per month in premium. We can get them the same 1mm death benefit but for 500/ month. this would use their current 1035 ex value plus other unimportant variables to bring down the monthly premium cost. Given the current policies internal rate of return vs the new policies internal rate of return combined - for consideration - the new lower premium, what is the cost/benefit of sacrificing the old policy's current cash value? Does it make sense in the short, medium and long term? This is the spreadsheet I'd like built. Something that can be used over and over.
Skills: analysis, benefits