Alternative Life Insurance Polices
Adjustable Life
Also known as blended or combination policies, are distinguished by the flexibility that comes from combining term and permanent insurance into a single plan.
Universal life
Characterized by flexible premiums, & an adjustable death benefit. Part of the premium goes into an investment account that grows & earns interest. You are able to borrow or withdraw your cash value.
Face Amount Plus Cash Value
Contract that promises to pay at the insured's death the face amount of the policy plus a sum equal to the policy's cash value. This is not a common policy.
Front-end Load
Is assessed a policyholder when the policy is initially issued.
Back-end Load
Is one assessed when a policy is surrendered
Variable / Universal Whole Life (VUL)
Offers the policyowner a combination of investment options with a flexible premium payment / expense, deductions, method, and a guarantee minimum death benefit. It's an insurance & investment product with flexible/variable premium.
Variable Whole Life
Premium payments are fixed. Part of the premium is placed into a separate account, which is invested in a stock, bond, or money market. The death benefit is guaranteed, but the cash value of the benefit can vary considerably due to the stock market.
Option B Universal Life
The death benefit equals the face amount (pure insurance) plus the cash values (level term plus increasing cash values). To comply with the tax code's definition of life insurance. Cash values cannot be disproportionately larger than the term insurance portion.
HIGH PREMIUM TYPE (CAWL)
The initial premium is relatively high. It possesses an optional pay-up or vanishing premium provision. This provision states that the policyowner may cease paying premiums once the policy's values are sufficient to pay-up the contract.
Option A Universal Life
The policy owner may designate a specified amount of insurance. The death benefit equals the cash value plus the remaining pure insurance.
Equity Index Universal Life Insurance
This plan allows policyholders to link accumulation values to an outside equity index like S&P 500. 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index.
Accidental Death and Dismemberment
This policy can provide financial benefits. If an insured is killed, loses, a limb, suffers blindness, or is paralyzed in a covered accident.
Low Premium Type (CAWL)
This type includes an indeterminate premium that is low initially. It also contains a redetermination provision which states that after a specified period, the insurance company can re-figure the premium.
Non-Medical Life Insurance
Typically does not require medical exam & tends to be more expensive than medically underwritten policies. The insurer will average everyone's risk & charge accordingly.
Target Premium
is a suggested premium used in Universal Life policies. It does not guarantee there will be adequate funds to maintain the policy to any time, especially to life. It may give an indication of what will be needed (under conservative estimates), to maintain the policy.
Current Assumption Whole Life (CAWL)
is also known as interest-sensitive whole life. provides flexible (varying) premiums based on changing current interest rate
Universal Life Death Benefit Options
Offers two death benefits options. Option A Option B
