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Guidelines |
Routine Requirements | ||
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Earned |
Unearned |
Always needed: Gross annual earned income on the application. Always needed: details of all existing life coverage and whether it is individual or group coverage Third party financials from a CPA will be required for applications of $2 million or greater. Examples are a current income statement and balance sheet. |
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Adults to age 30 |
Up to 30 X earned income |
X3 | |
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30 through 39 |
Up to 25 X earned income |
X3 | |
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40 through 49 |
Up to 20 X earned income |
X3 | |
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50 through 59 |
Up to 15 X earned income |
X3 | |
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60 through 64 |
Five to 10 X earned income |
X3 | |
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65+ |
Three to five X earned income |
X3 | |
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The total in force with all companies (excluding group coverage) should not exceed an applicant’s annual earned income times the multiple for age or current net worth, whichever is greater. | |||
Income replacement coverage establishes security against loss by providing funds to repay personal debt and continue income. In effect, the goal is to determine an amount, which maintains the previous lifestyle. This amount is referred to as the Human Life Value. This value is calculated via a multiple of income. Income in this context would include salaries, wages and bonuses.
A homemaker/spouse would qualify for a face amount equal to 10 times the household income, not to exceed $1 million in face amount. Amounts above $1 million will require additional financial verification.
Underwriting may evaluate applications in excess of these limits. Individuals with high net worth, potential estate taxes based on a financial advisor’s evaluation, and a Cover Letter from the sales representative providing specific information on why the guidelines should be exceeded will be required. Copies of the most recent tax return with all schedules, a balance sheet, and schedule of assets and liabilities should be included. Inspection reports may be obtained at any time and are required on some larger amounts. (Prepare your clients for providing such information.) Premiums greater than 5 percent of the gross family income may require additional clarification.