P1P2

  • Even if there is enough in your account to pay the premiums, continuing to pay premiums yourself means that you build up more cash value.

2007 - NAIC Life Insurance Buyer's Guide  - 10p

Even if there is enough in your account <SIV> to pay the premiums <P2>, continuing to pay premiums<P1> yourself means that you build up more cash value.

2007NAIC Life Insurance Buyer's Guide  - 10p

Let's review the basic mechanics of Universal Life.

  • The first thing that has to occur is a premium payment. <P1>
  • A premium <P1>may be paid at any time and in any amount desired.
  • Whenever a premium <P1> is paid, loads <E1>are deducted from that premium <P1>.
  • The balance <P1-E1> is added to a fund <SIV>.
  • On a monthly basis, cost of  insurance charges <P2> are deducted from the fund <SIV>.
  • Expense charges <E2> may be deducted from the fund <SIV>, especially in the early policy years, and interest <i>is added to the fund <SIV> on a monthly basis.
  • The cash value <SIV> changes each month based on the net impact of the income <P1/i>and deduction transactions.

    The policy does not lapse if a premium is not paid; rather, it lapses if the fund balance becomes too small to pay the next month's cost of insurance. 

--  BEN H. MITCHELL

1981 - Universal Life, Society of Actuaries