Universal Life as Term
5 – UL As Term
It’s very possible to have a 25-year term with zero cash value, using a UL product.
UL products go the complete spectrum of selling low premiums or high premiums.
There is a company that is issuing a UL product that is a level premium for 30 years.
Since the advent of the Technical and Miscellaneous Revenue Act of 1988 (TAMRA),
many companies and agents are apprehensive about selling a high premium product.
Basically, the high premium product is used to imitate the participating product. We’ve
gone away from that, in trying to go in for low premiums and for longer durations. It’s
very possible to have a 25-year term with zero cash value, using a UL product. We all
understand the opposite effect, of how everybody is trying to use the UL as a cash
accumulator, using it as an investment and trying to maximize the contribution that can
be put into it. Tax law, valuation law, compensation, all tend to regulate the product,
not the function. And, with the advent of TAMRA, we are regulating how much money
can go into a life product at specific durations at least for the first seven years and the
combination of annuities and/or premium paid in advance, and shifting the cost between
them to minimize the tax effect to the insured.
1990 – Life Product Development, Society of Actuaries
Video: Exam MLC Problem 297 “Learning Objective “Universal Life.” Question: Calculate the Level Annual Premium that results in an account value of 0 at the end of the 20th year.” – UW- Madison / SOA – <Bonk: Goal: use a Universal Life policy to design a 20-year term policy.>