Nature of Variable life products

What is Universal Life?

-Permanent life insurance - Cash and loan value - Flexible premium- Adjust or skip premium- Current assumptions with transparency- Interest, mortality, expense- Adjustable death benefit- Option A or B

Universal Life Option B:

Increasing death benefit option Death Benefit gradually increases

Universal Life Provisions

Insurer must send an annual report to policyowner, with previous and current values, death benefit, cash surrender value, and amount of outstanding loan

Cash Value

NOT GUARANTEED, Separate account

Universal Life Option A:

The level death benefit option Death benefit remains level Cash Value gradually increases

Has Fixed Premium

Variable Life

Universal Life Policies

allowed to have loans

Variable Life policy loans

can borrow on the cash value

Seperate account

cannont be commingled with the general account

If an annuitant dies and beneficiary is not named,

death benefit will be paid to the annuitants estate

Variable Universal Life

- Combination of Universal Life and Variable Life .- Variable Life features: - Separate investment account for CV - No guaranteed minimum CV or loan value - Universal Life features: - Flexible premiums - Option A (level) or option B (increasing)death benefit- Current assumptions with transparency*Interest, mortality, expense

Advantages of UL

- Flexibility in premium payment - Death benefit is adjustable - Transparency of policy elements - Current assumptions for interest, mortality and expenses

When is Universal Life Indicated?

- Need for ultimate flexibility- Premium payment can be adjusted/skipped - Death benefit can be adjusted - Excellent program for young family if discipline and resources to pay adequate premiums to maintain the policy .- Low initial premium - High death benefit - Cash Value accumulation

What is Variable Life?

- Permanent life insurance with investment flexibility .- Level premium - Policyholder has separate investment account for cash value .- No guaranteed minimum CV or loan value. - Death benefit usually a multiple of CV subject to guaranteed minimum.

Accumulation Period AKA Pay-In Period

Period of time over which the woner makes payments (premiums into an annuity. Payments earn interest on a tax-deferred basis

Flexible premium policies

adjustable whole life policy may be suitable for someone with fluctuating income

Universal Life

also known as flexible premium adjustable life interest-sensitive policy always annually renewable term insurance

face amount/face value

amount of money listed on face page of policy, amount that will be paid in event of insureds death

Annuity income based on

amount of premium paid or cash value frequency of payment interest rate annuitants age and gender

Grace Period in flexible premium universal life

at least 30 days after lapse

Annuities

waive surrender charges for death or disability

Waiver of Premium Rider in Universal Life Disabled insured

waives the premium for a total disability after a waiver period

Variable (Universal Life)

Flexible Premium

Variable Life has

Guaranteed minimum death benefit Cash value based on investments in insurance company's general investment account

Must submit in Universal Life

a statement of policy information for the applicant, delieverd within 15 working days.

Universal life withdrawals and Partial surrenders

charge may apply but available

Before a variable life is submitted, must submit

copies and a general description of policies statement of assets held in seperate account

in seperate account

description of investment objective statement describing procedures for changing the investment policy

Variable Life is

dually regulated by the state and federal Gov SEC & FINRA Also regulated by the insurance department as an insurance product

Variable life

earnings on cash value are tax deferred

Variable life

face amount can increase or decrease to a stated minimum

Variable (whole Life)

fixed premium

Variable Life

fixed premium, minimum death benefit cash value and the actual amountof deah benefit are not guaranteed

Policy Loans

insurance company charges interest on outstanding policy loans

Variable Life

level fixed premium investment-based product fixed premiums & guaranteed minimum death benefit Cash value not guaranteed

Variable annuities

payments not guaranteed; premiums are in separate, and invested in stocks and bonds

If insured skips a premium payment in universal life

premium may be deducted from the policy's cash value policy wont lapse

option1/option A:

provides a level death benefit equal to the policys face amount as the policys cash value increases

Option 2/Option B:

provides for an increasing death benefit equal to the policys face amount plus the cash account

surrender charges

reduce the amount a policyowner will receive upon cash surrender

Agents selling variable life must be

registered with FINRA licensed by the state to sell life insurance recieved a securities license

If an annuitant dies during the accumulation period

the insurer is obligated to return to the beneficiary either the cash value, or the total premiums paid, whichever is greater the beneficiary is responsible for the taxes

Annuity Period AKA Annuitization Period Liquidation Period Pay-Out Period

time in which the sum that ahs been accumulated during the accumulation period is converted into stream of income payments to the annuitant.