(p53) - This Chapter explores the third type of permanent insurance, universal life (UL) insurance, which evolved after numerous modifications to whole life insurance.
[1] - Illustrations are commonly used to help the client understand the recommended policy, and they are often appended to the life insurance application so that the insurance company’s underwriters have a clear picture of the coverage being applied for.
[2] - In the case of a term policy, the illustration just shows the premiums payable and the death benefit in each policy year.
For permanent insurance policies, the illustrations are more complex, in that they also include projections of future policy dividends, mortality deductions, investment account values, and cash surrender values for each policy year.
[Bonk: [2]] +Coverage Period, What is the Purpose of Cash Value? - Why Should anybody care about any of this? LC-Blumenthal - Look - CSV vs CV]
[Bonk: [2]] - Garret Gunderson = Why do they call UL Permanent?]
However, these projections are only intended to demonstrate how the policy works, and are not a prediction of guaranteed or expected performance.
[Bonk: 1) UL - Bobby Samuelson, LIFE180 - Missing COI Column, 2) UL - Any Plan, Coverage Period. 3) UL - Missing - Death Benefit in each policy year]
[3] - Participating whole life and universal life policy outcomes are very sensitive to even small changes in investment performance, particularly over the long life of these policies. To highlight this sensitivity, most policy illustrations now include projections for at least two investment return scenarios. Agents must ensure that policyholders understand that the projections are not predictions of future performance. In fact, the policyholder is typically required to sign the illustration, acknowledging that he understands the limitations of the illustration.
[4] - In addition to the official policy illustrations generated by the insurance company’s software, agents may find it useful to develop their own simple spreadsheets to compare products or insurance options, such as those provided earlier in the case study above.