Coverage Period

The agent said that Universal Life policy premiums would stay the same, but I came to realize that this is not true of our policies.

...what bothers me is that I am afraid that this same misleading information may be the basis of my children's and grandchildren's ... planning...

STATEMENT OF GLORIA DARLEEN NEWBERRY

1993 - GOV - When Will Policyholders Be Given The Truth About Life Insurance - 354p

  • In fact, it is accurate to describe Universal Life as a generalized version of the actuarial formulas underlying traditional life insurance products.
  • In other words, it is possible to produce any traditional plan of insurance from the generalized formulas  underlying universal life. 

-- Alan Richards, president and chief executive officer of E. F. Hutton Life Insurance Co.,

1983 - GOV -  Tax treatment of life insurance: Hearings before the Subcommittee on Select Revenue Measures of the Committee on Ways and Means, page 448.

It's very possible to have a 25-year term with zero cash value, using a UL product.

--  LAWRENCE SILKES

1990 -  LIFE PRODUCT DEVELOPMENT UPDATE, Society of Actuaries


In fact, a UL <Universal Life> policy will turn out to provide term life insurance, whole life insurance, or endowment insurance, depending on the premiums paid and other policy factors.

2015Life Insurance, Black Jr., Skipper, Black III, (Huebner Series)


Video: Exam MLC Problem 297 "Learning Objective "Universal Life." Question: Calculate the Level Annual Premium that results in an account value of 0 at the end of the 20th year." - UW- Madison / SOA - <Bonk: Goal: use a Universal Life policy to design a 20-year term policy.>  

  • Consumer Disclosure Issues Working Group
    of the Product Development (A) Task Force

    • 1989-1 - NAIC Proc. (p673) - <Letters/ Feedback>
    • 2. The guaranteed ending date of the policy. A statement which says: Based on guaranteed interest rates, guaranteed mortality charges and the payment of the scheduled premiums, coverage will end on---------·
    • RoseMarie is insisting that the Policy Schedule Page identifies the date when the policy will lapse based on paying the planned premium and guaranteed assumptions of interest and mortality rates.

<Universal Life> afford(s)purchasers greater flexibility in designing their contracts so as to meet their individual needs. 

-- STATEMENT OF THE <ACLI> AMERICAN COUNCIL OF LIFE INSURANCE, BEFORE THE NASAA/NAIC JOINT REGULATORY INSURANCE PRODUCTS STUDY COMMITTEE,  August 31,1981

1982-1, NAIC Proceedings

The main concern was that an unsophisticated buyer purchased a policy and did not know what the coverages, benefits and limitations were.

1988-2 - NAIC Proc.

The complications begin with a very simple question:

  • What's the premium for Universal Life? It could be almost anything.
  • Then what's the cash value? That depends on the premium.
  • It is the relationship between the premium and cash value that determines the product characteristics of Universal Life.

--  BEN H. MITCHELL

1981 UNIVERSAL LIFE, Society of Actuaries

2017/11/15 Letter, LIBGWG, ACLI Redlined Draft

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>>>>

  • He said many consumers cannot distinguish between universal life and whole life.
  • He said a narrative explanation was needed because many did not understand the numbers or the fact that a universal life policy might drain the cash value until there was no coverage left. 

--  Mr. Barkacs <Western Southern> 

1994-3. NAIC Proceedings

Our sales illustrations are developed to comply with state laws and regulations.

While the expiration date of the policy is not required by law, it is an important feature because it lets the customer know how long the policy will remain in-force, based on guaranteed factors and planned premiums. (p187)

1991-1992 - FINAL REPORT* OF THE TASK FORCE FOR RESEARCH ON LIFE INSURANCE SALES ILLUSTRATIONS  - 142p, Society of Actuaries

Universal Life

Universal life insurance is more flexible than whole life. You can change the amount of your premiums and death benefit. But any changes you make could affect how long your coverage lasts. If your premiums are lower than the cost of insurance, the difference is taken from the cash value. If the cash value reaches zero, your policy could lapse.

The company will send you a report each year showing your cash value and how long the policy might last. The estimate is based on the cash value amount, the cost of insurance, and other factors. Review it carefully. You might need to pay more in premiums to keep the policy in effect until the maturity date.

https://tdi.texas.gov/pubs/consumer/cb018.html

  • He said many consumers cannot distinguish between universal life and whole life.
  • He said a narrative explanation was needed because many did not understand the numbers or the fact that a universal life policy might drain the cash value until there was no coverage left.

--  Mr. Barkacs <Bonk: (Western Southern)> 

1994-3 NAIC Proceedings

Other policies may have special features which allow flexibility as to premiums and coverage. Some let you choose the death benefit you want and the premium amount you can pay.  The kind of Insurance and coverage period are determined by these choices. 

One kind of flexible premium Policy, often called universal life, lets you vary your premium payments every year and even skip a payment if you wish.  The premiums you pay (less expense charges) go into policy account that earns interest and charges for the insurance are deducted from the account. Here, insurance continues as long as there is enough money in the account to  pay the insurance charges.

1984 NAIC Life Insurance Buyer's Guide - Scribe = ACLI