Net to the estate

The corporate estate bond, compared to what?

A corporation may have money in it that the shareholder cannot access for personal use without paying tax. Their planning includes transferring some or all of it to others. The industry recommends a corporate estate bond. Potential purchasers of life insurance should consider moving some of that surplus into a life insurance contract, and most of what comes out at death comes out as a capital dividend rather than a taxable one.

The arithmetic is real. Making it simple enough for a consumer to understand whether it is something they should consider is the challenge. Here is how we can compare it, using the approach TAN is working to generally accept: “ROI” is currently positioned as slide 3 of 5 Slides Only. At this stage, we offer to compare the return on investment, personally owned, and add a corporate button.

The way we show the math follows CLHIA illustration guidelines: a spread of results rather than one. So we take a range of probable dates of death and compare the financial results as a return on investment. The internal rate of return (IRR) comes from the life insurance company’s own illustrations. On its own terms, that analysis is now complete.

Compared to what is another question. To keep decision making simple, an advisor may select a single rate of return for the alternative, making a presentation easy to follow, and most start there. This page adds two things: a rate beside every dollar figure, and assumptions the consumer can move. Then anyone looking at it can see whether the conclusion depends on the product or on the assumptions for the alternative.