Cash Value (Account Value) (SIV-Self Insurance Value)

  • One would be, for example, term life insurance, I think you could totally deregulate. And people understand term life insurance and so on.
  • You get into some of the cash value products, people are very confused.
  • They need help. They need information. It is a very difficult product.

--  J. Robert Hunter, Director of Insurance, Consumer Federation of America

2004 0331 - GOV - WORKING WITH STATE REGULATORS TO INCREASE INSURANCE CHOICES FOR CONSUMERS - PDF: 205p

  • Why can’t I compare cash value products and have some sense of what is going on in the marketplace?
  • Because the notion—I mean, it really is a problem, and it is a problem that is underaddressed because everyone is so focused on solvency that they forget all these other important regulatory issues. (p26)

2011/09/14 - EMERGING ISSUES IN INSURANCE REGULATION - 51p

2017/2/17 - LIBGWG Conference Call - "Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) agreed that use of the term “cash value” was confusing."

Unlike a term policy, which can end after a specified number of years, permanent life insurance will continue to the policy’s maturity age so long as premiums are paid.

(Note that this isn’t exactly accurate for UL, where policies can continue as long as the cash value is sufficient to pay the policy charges. We may want to make that distinction.)  <<< ----ACLI Wording <BonkNote>>>>

2017/11/15 - ACLI Letter, NAIC LIBGWG

The primary purpose of the policy's Cash Value is to fund the Cost of Insurance.

1999 - Suitability, Dearborn Continuing Education

Traditional plans are fairly simple in their structure. One can look at their premiums, their cash values and their dividends, if there happen to be any. 

Universal life presents something of a paradox. 

--BEN H. MITCHELL

1981 - Universal Life, Society of Actuaries

Blumenthal v New York Life - Cash Value What else is it supposed to be
  • This creature called universal life has evolved from a combination of term insurance and a flexible premium annuity to a range of differing products with various design features.
  • Common to any of these variations is the fact that future cash values cannot be determined completely at issue.
  • Cash values (and other benefits) are produced by a formula that is specified in advance. Some of the various elements used in the formula, however, can be adjusted after issue by the insurer. 

6. THE CONCEPT OF THE BENEFIT GENERATING ACCOUNT
We have mentioned several times that the function of the account value is to determine future benefits. 

1983 - UNIVERSAL LIFE VALUATION AND NONFORFEITURE: A GENERALIZED MODEL, Society of Actuaries

A cash value is therefore by definition a savings account whether we choose to call it that or not. 

-- MR. ALAN RICHARDS <EF Hutton>

1981 - THE FUTURE OF PERMANENT LIFE INSURANCE, Society of Actuaries

Despite the fact that there are cash values in the thirty‐year term contract, from a consumer's viewpoint it has no savings element.

All of the premium is required to provide the thirty years of protection.

The savings element in the thirty‐year endowment is the difference in the premiums of the two contracts.

1973 - PRICE DISCLOSURE AND COST COMPARISON, Society of Actuaries 

Cash value policies differ from term insurance in three important ways.

  • First, the premiums for a cash value policy are initially much higher than for term insurance for the same amount of insurance protection.
  • Second, unlike the premiums for term insurance, cash value premiums do not go up with age, but remain the same throughout the payment period.
  • Third, these insurance policies develop cash values which increase each year.

    1979 - GOV - Small business problems with insurance Part 1, Government Hearing

So often in the past eight or ten years, the purpose of a cash value has
been to give an agent another first-year commission.

-- W. KEITH SLOAN

1995 - PRACTICAL ILLUSTRATIONS AND NONFORFEITURE VALUES, Society of Actuaries - 14p

Cash values, which are the residual amounts of prefunding reserves returned to policyholders if the contracts are terminated, are secondary benefits.


-- Technical Resource Group <Industry>

1994-1, NAIC Proceedings

And, despite the stellar performance of variable funds, in reality policyholders often allocate a large percentage of their premium to the fixed account.

--  ANNE M. KATCHER (Equitable)

1992 - Product Management, Society of Actuaries

ACADEMIC

2004, AP UNIVERSAL LIFE INSURANCE – ASPECTS OF THE CASH VALUE DEVELOPMENT, Martin Birkenheier, 146p

Government Hearings

1978 - GOV - Life Insurance Marketing and Cost Disclosure Report - Moss - 106p 

-- STATEMENT OF THOMAS GREGG, CHAIRMAN, COMMITTEE ON
FEDERAL LAW AND LEGISLATION, NATIONAL ASSOCIATION OF
LIFE UNDERWRITERS <NAIFA / NALU>, p314

1983 - GOV - Tax Treatment of Life Insurance 

MEDIA