One of our primary goals at Insurance and Estates is to provide our visitors with the knowledge needed to make the best choice regarding the carrier and plan they choose. In the following North American review, we will cover the strengths of the company, its ratings, its history and its various products and features. Is North American the right company for you?
Review of North American Company for Life and Health
Considering your needs, goals and objective is necessary when reviewing over 800 companies offering life insurance and annuities. If your goal is to locate the single best option it can be exhausting. That is why we have put together our top picks for the best cash value life insurance companies.
About North American Company
North American Company is part of Sammons Group. The company was founded under the name North American Accident Association and has been in business for 131 years.
The company is privately owned and operates in a similar fashion to a mutual company in that it does not need to answer to shareholders and the short-term earnings pressures publicly traded companies are under.
North American Company boasts over $117 Billion life insurance in force and over $22 Billion in assets. The company is committed to a disciplined and conservative investment strategy which is reflected in its various ratings.
North American Company Ratings
North American Company boasts some very strong ratings, such as
- A.M. Best rating: A+, “Superior” (2nd highest rating as of August 2016)
- S&P Global rating: A+, “Strong” (5th highest rating as of October 2016)
- Fitch rating: A+
- Comdex ranking: 88 (out of 100)
In addition, although not accredited, North American Company has a BBB rating of A+.
North American Product Offerings
North American offers products and services in two primary areas:
- Term Life
- Universal Life
- Indexed Universal Life
North American offers different types of annuities, including:
- Fixed Indexed Annuities
- Tradition Fixed Annuities
- Single Premium Immediate Annuities
North American Company Life Insurance Policies
North American offers both term life and permanent life insurance coverage. If you are not sure which is best for you stop by our article covering term life vs permanent life insurance.
Benefits of Term Life Insurance
- Lower Initial Cost
- Income Protection
- Mortgage Protection
- Conversion Option
Benefits of Permanent Life Insurance
- Business Succession Planning
- Buy Sell Agreements
- Key Man Insurance
- Estate Planning
- Infinite Banking
- Executive Bonus Plans
- Deferred Compensation Plans
- Retirement Planning
- Wealth Building
North American Company Life Insurance Policies
ADDvantage Term Life Insurance
North American offers convertible term life insurance available for 10, 15, 20 or 30 years. The policy can be converted to permanent life with no evidence of insurability required.
Universal Life Insurance
North American Company for Life and Health offers Universal Life and Indexed Universal Life. Universal life is permanent coverage with a flexible death benefit and premium. In addition, universal life insurance builds cash value, which grows over time via premium payments and interest accrued.
Custom Universal Life
A permanent life policy to age 120. Premiums are paid until age 100.
Indexed Universal Life
North American really shines in this department. The company offers 4 different types of Indexed Universal Life insurance policies, including:
- Builder IUL
- Guaranteed Builder IUL
- Rapid Builder IUL
- Survivorship GIUL
Survivorship life insurance covers the lives of two individuals. It is typically less expensive than a policy on just one person and is an ideal choice for estate planning using life insurance to maximize your estate value.
Rapid Builder IUL
This is our favorite indexed universal life insurance policy from North American Company. If you are considering an IUL and you want early high cash value growth, this is definitely a policy to consider.
Some of our clients who practice infinite banking with their policy are interested in IUL. The Rapid Builder IUL is definitely on the short list of recommended IUL policies when becoming your own banker.
Like all IUL policies, the policy either receives a fixed rate or tracks a specific index, typically the S&P 500, but there are other index options available. The policy’s cash account is not directly invested in the market; rather the cash account is indexed to the chosen market, and has a minimum floor and a maximum cap.
The index cap rate is the maximum credit given based on the performance of the chosen index.
The index floor rate is the minimum interest rate credited. The index floor rate is guaranteed to never be less than 0%.
The index participation rate is the change in the index used in calculating the total credited interest rate.
The Rapid Builder IUL does not have a premium load, so 100% of your premium less monthly deductions is applied to the policy and is eligible for interest credits
North American offers different crediting methods. One of the unique features of the carriers IUL policies is that it offers daily averaging, which allows premiums to be credited to the indexing account the next business day after received.
The policy offers two types of life insurance loans: standard (fixed) and variable. You also have the option of changing your preference from standard to variable and back again.
The policy also offers an overloan protection benefit that will keep the policy in force when excessive loans are taken.
Available Index Options:
- The Standard & Poor’s 500® Composite Stock Price Index (S&P 500)
- The Standard & Poor’s 400® Index (S&P MidCap 400)
- The NASDAQ-100® Stock Price Index (NASDAQ-100)
- The EURO STOXX 50
- The Russell 2000 Index
- Multi-Index—An index option based on the performance of the S&P 500, Russell 2000, and the EURO STOXX 50.
Chronic Illness Accelerated Benefit Rider
North American Company’s Chronic Illness Accelerated Benefit Rider (CIABR) is automatically included on many of the Company’s new permanent life insurance policies. With the growing costs associated with long term care (LTC), having either a long term care or chronic illness rider can provide financial relief if you have need to LTC.
In order to qualify, you must be diagnosed within the last 12 months with a qualifying chronic illness by a certified physician and wait until the 90 day elimination period has passed after you file your chronic illness claim. Further, you must be either unable to perform at least 2 of 6 activities of daily living or have a severe cognitive impairment that poses a threat to your health and well being.
The chronic illness rider is available on most newly issued policies for applicants up to age 75. You can request up to 24% of the total death benefit, up to $240,000 a year. The maximum amount of advanced death benefit allowed is $1,000,000.
Life Insurance Riders and Endorsements
Not all the riders and endorsements listed below are available for all North American Company life insurance policies. Further, riders and endorsements vary from state to state.
Accelerated Death Benefit: pays you a portion of the death benefit in advance (while alive) if you are diagnosed with a qualifying condition.
Guaranteed Insurability: an excellent rider when considering life insurance for kids, it is available for ages 15 days to 40 years. The guaranteed insurability rider provides the option to purchase additional coverage without having to provide proof of insurability.
Waiver of Monthly Deduction: if you are totally disabled for 6 months, this rider waives monthly charges, monthly loads, administrative fees, and any other rider charges.
Additional Benefits of Cash Value Life Insurance
Tax free life insurance policy loans
Life insurance loans from the carrier using your cash value as collateral are income tax free, unless the policy is considered a MEC*. Additionally, you can withdraw cash from your policy up to your basis without creating a taxable event.
*You can go here to read more what is a modified endowment contract (MEC).
Tax deferred cash value growth
Under IRC 7702, cash value life insurance grows tax deferred. If you practice proper policy management, you may never need to pay taxes on the cash value growth.
Tax free death benefit
Typically, your life insurance beneficiary receives the death benefit income tax free. However, a death benefit may be taxed is if your estate exceeds the federal estate tax exemption limit or you live in a state with an inheritance tax. Therefore, if you have a large estate and live in a state with an inheritance tax, careful asset protection planning is recommended.
North American Company Life Insurance Review Conclusion
Have questions or would you like to see an illustration for North American or any of the other cash value life insurance companies we represent? Give us a call today for a free life insurance consultation with an advanced markets professional.