`Tricks' to Avoid the Three-Year Transfer Rule

Brody, Lawrence
June 1997
Journal of Financial Planning;Jun97, Vol. 10 Issue 3, p30
Academic Journal
This article provides information on how insurers can avoid a three-year waiting period for transfer to a different insurance policy in the U.S. As interpreted in the Insurance law, with existing policies to be transferred to an irrevocable insurance trust, the insured doesn't have any choice but to take the transfer and run the three-year rule risk. With the newly acquired policy, there is no reason for the insured to have his owned incidents of ownership in the policy and transfer them to the third-party owner. Some insurance practitioners submit an application with premium, showing the insured as the initial applicant and owner, which is later "withdrawn" when the trust is completed and in existence, and replaced with a new application, showing the third party as the intended owner and applicant.


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