I have some friends who have a similar 4.5% minimum crediting rate UL policy.
One thing to find out is if it is a Option A or Option B policy:
Quote:
Option A provides the face amount of the policy when the insured dies. The contract can still accumulate cash value, but if the policyholder dies, the beneficiary receives only the death benefit, not the cash value. Option B provides the beneficiary with the death benefit plus any cash value.
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If it is Option A, then the impact of your dump-ins will be to reduce the net amount at risk and in turn, the amount of mortality charges. If it is Option B then any dump-in will just accumulate at 4.5% interest. Both are attractive... just different.
They should be able to run an inforce illustration showing projected account values and death benefit under scenarios like dumping in as much as possible while keeping the contract life insurance, paying as little premium as possible and something in between. Then look at the IRR of each scenario.
I have an older 1977 whole life policy that I keep even though I don't need the life insurance anymore. The premium is $20/month. Compared to cashing it in now vs keeping it, it is attractive to keep it for my heirs... but even just looking at the cash value it is yielding about 3% with no interest rate risk. If I ever needed the money, I can just cash it in but as ballast this money is near the bottom of the keel.