Cash Value

  • Account Value
  • Benefit-Generating Account
  • Reserve
  • SIV-Self Insurance Value
  • There are those who would say that while cash value life insurance may not be dead, it is at least sick, if not dying, and I think that's a disservice to the people of this country.

--  Robert E. Wilcox - (Insurance Commissioner for the State of Utah, and Chairman of the Life Disclosure Working Group (NAIC))

1996 - SOA - A New Look at U.S. Nonforfeiture Regulation - 16p

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 - SOA - Universal Life Valuation and Nonforgeiture: A Generalized Model, Shane A. Chalke and Michael F. Davlin, Society of Actuaries - 72p

  • According to the Illustration, "[c]ash value accumulation is important because it is used to pay insurance costs and other charges (monthly deductions) necessary to keep the policy in force and because it can also be withdrawn to help meet a policyowner's other financial needs. . . ." Id

2008 - Legal Case - Blumenthal v New York Life - Plaintiff's Response To Defendant's Motion For Summary Judgment And Brief In Support - Case 5:08-cv-00456-F - Document 85 - Filed 06/01/10 - Page 10 of 37

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

1999 - Suitability, Dearborn Continuing Education

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

--   Alan RichardsL  - (EF Hutton) 

1981 - SOA - The Future of Permanent Life Insurance (rsa81v7n12), Society of Actuaries - 22p

Blumenthal v New York Life - Cash Value What else is it supposed to be
  • 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. (p26)

--  Paul Overberg

1973 - SOA - Price Disclosure and Cost Comparison, Society of Actuaries - 186p

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

  • 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

  • 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 

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