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.

The objective is to rank the participating whole life products available to independent advisors in Canada, on published criteria, with the scoring open to inspection. Not because a ranking settles anything, but because an advisor cannot write a real reason-why letter without naming companies and saying why this one. No carrier is going to hand us sufficient product information that lets us do that. If we do not build it, nobody will.

That makes it a professional disclosure obligation rather than a marketing exercise. The industry already requires a reason-why letter. A letter that names a product without saying what it was compared against, on what criteria, is not a reason. It is a record.

This is a work in process, and everything below is open. Here is the methodology.

Enhanced Whole Life, thirty years after it broke, and what changed when an insurer guaranteed the moving part that broke us.

Here is a structure I did not expect to find on a Canadian shelf, and I have only found it once so far.

An insurer offers a guaranteed amount of life insurance for a guaranteed premium over twenty years, at the lowest cost for a guaranteed twenty-pay I can find on the market. Then it funds part of that guarantee with two things it does not control and cannot promise: the dividend its participating pool earns, and the cost of one-year term insurance it buys from a reinsurer. Neither of those is guaranteed. The result is.

So the insurer has taken the floor. Whatever happens to investment markets, to mortality experience, or to reinsurance pricing over the next fifty or sixty years, the amount the family receives does not move.

And then, if the pool does well — and nobody will know how well for a very long time, possibly not until the contract is a claim — the policyholder does well too, out of the same pool, on the same experience. It looks like a product designed by an actuary for a large group of friends all sharing the risk.

I cannot see how they priced it. That is not a complaint. Based on forty years of doing this, I do not know how you do it, and it is the one question I would most like answered. But I have read the contract and run the illustrations, and nothing in either of them is hidden.