P1P2

<Bonk: P1->P2->SIV>

Cash Value Life Insurance

  • The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways.

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

<Bonk: P1->SIV->P2>

Let's review the basic mechanics of Universal Life.

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

1981 - SOA - Universal Life (RSA81V7N412), Society of Actuaries - 16p

2018 0319  - (LIBGWG) Life Insurance Buyer's Guide Working Group - Conference Call NAIC Proceedings

  • The Working Group discussed some language that was hard to understand referring to premiumsP1/P2 and benefitsDB-A/DB-CP. 
  • The Working Group agreed to include "premiumsP1/P2 or valuesSIV/DB-A/DB-CP vary from year."
  • The Working Group agreed that language comparing different types of policies should be included in the next draft.

2018 0319  - (LIBGWG) Life Insurance Buyer's Guide Working Group - Conference Call NAIC Proceedings

  • The Working Group discussed some language that was hard to understand referring to premiumsAB and benefitsCD.
  • The Working Group agreed to include "premiumsEF or valuesGHJKvary from year."

Bonk P1 E1 SIV i CIV P2 E2 DB-A DB-CP
 
  • premiumsA
  • premiumsE 
 
  • valuesG
 
  • valuesH
  • premiumsB
  • premiumsF
 
  • BenefitsC
  • valuesI
  • BenefitsD
  • valuesK
  • The cash flows of a policy are defined by the Society for this purpose as "the actual transfer of funds between the policyholder and the insurance company in either direction, and includes premiums, dividends, cash values and death benefits."  Actuaries Report, supra n. 33, at 6.
  • So what I am saying is that the Belth calculations cannot get out of a policy anything that isn't there already.

    • The premiums and the dividends and the amounts of insurance and the cash valueare all there is to a policy.

    • You can fool around with them any way you like but mostly you can get at all the facts just by looking at basic things.

--  Julius Vogel (Prudential)

 

1978 0807/0814/0815- GOV (House) - Life Insurance Marketing and Cost Disclosure - Congressman Moss - [PDF-826p-govinfo.gov-page]

Universal life is permanent insurance combining term insurance with a cash account earning tax-deferred interest.

  • Under most contracts, premiums and/or death benefits can fluctuate (within the contract’s bounds) with policyholder preference.
  • The policy stays in effect as long as the cash value is sufficient to cover premiums.
  • Additionally, the insurer usually guarantees the cash value will not fall below a minimum value.
  • The cash value of the policy can also be used to pay the term insurance portion of the policy.  (p17)

2013 - NAIC - State of the Life Insurance Industry: Implications of Industry Trends - 220p