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2010-01-28T03:46:00.000-08:00

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Life Insurance and Life Insurance Plans

2009-12-24T06:18:00.000-08:00

Life Insurance
Decisions on life insurance can help you plan your estate and ensure the future of those who matter to you most in protecting against the financial consequences of your death. Insurance proceeds tax free and paid directly to your beneficiaries. Since the process to circumvent the will, it saves time and money.
Why is life insurance important?

Life insurance is an effective way to help your loved ones support their quality of life, debt relief and education funding in cases of premature death. Some politicians RiverSource ® Insurance can also help you build a cash value of future goals such as retirement. Use our product life Selector learn more about our policies.
Planning for life insurance with Ameriprise Financial

When you start looking for life insurance with Ameriprise financial advisor help you every step of the process. By working together, you can:

1. Determine the role of life insurance in financial terms.

2. Discover what matters most to you.

3. Determine your coverage needs. You and the adviser to determine how much need life insurance by collecting information about your:

    * The current monthly expenses
    * Other family commitments (lump)
    * Life insurance and savings
    * Expected net annual income of the breadwinner cons revenue necessary to cover the cost of living
    * In general, the basic needs of survivors.

Term insurance	Permanent insurance
Purchased to cover a temporary need	Purchased for long-term protection
You pay an annual premium for a specific number of years for which you receive a predetermined amount of life insurance protection. If the insured passes away during the specified years, beneficiaries collect the proceeds of the policy. If the insured passes away after the specified years, the beneficiaries receive no proceeds. Policy does not build cash value	As long as premiums are paid on time and the policy remains in force, the death benefit will be paid. It is important to appropriately fund your policy and avoid excessive withdrawals to prevent your policy from lapsing. Types of permanent policies include whole life, universal life, variable universal life. Policy may build a cash value, which can be borrowed against tax-free to service other financial purposes.

Term insurance

Permanent insurance

Purchased to cover a temporary need

Purchased for long-term protection

You pay an annual premium for a specific number of years for which you receive a predetermined amount of life insurance protection.
If the insured passes away during the specified years, beneficiaries collect the proceeds of the policy. If the insured passes away after the specified years, the beneficiaries receive no proceeds.
Policy does not build cash value

As long as premiums are paid on time and the policy remains in force, the death benefit will be paid. It is important to appropriately fund your policy and avoid excessive withdrawals to prevent your policy from lapsing.
Types of permanent policies include whole life, universal life, variable universal life.
Policy may build a cash value, which can be borrowed against tax-free to service other financial purposes.

A Life Insurance Actuary's Guide to Term Life Insurance Quote Sites

2009-12-24T06:14:00.000-08:00

This is the second in a series of articles analyzing the sites quote term insurance life on the Internet. If you want to see the first study can be found here. In addition, the purchase of space life insurance for their sponsorship in kind.

I am conducting this research, to strengthen support for the exact price of a wide range of media. Currently, bids for term life insurance industry is booming with customer dissatisfaction, primarily due to industry dirtly little secret: "misquote problem."
But officials insurance offer John any of the three largest carriers, back from two of three. Quick Quote includes underwriting principles into their software, but they are inaccurate, missing the important question of the relationship of cholesterol. In addition, they lack some of the major competitive carriers.

InsWeb if a commendable job in quoting accurately, after our recent studies, they have updated their software includes the cholesterol ratio. But they are not too many carriers of the competition is strong consumer term life insurance site. Our previous study also included InsureMarket, but since they merged with their site InsWeb.

Quotesmith, Term4Sale and AccuQuote be all wrong direct John to buy carriers, whose rates are too low. These sites simply returns the list of companies life insurance prices without selection of subscription. AccuQuote subscription request many questions, but then not used to find answers online quotes. Quotesmith whether to provide the exact principles of leadership, unfortunately, very few consumers have the knowledge and patience to understand.

Of course, this is a case, but it illustrates the importance of the exact quote and carrier selection. More detailed and general analysis can be found by clicking here. We consider the agents of life insurance in Canada in future studies of life insurance.
Here's what happens: You choose a company, as quoted site, it displays the lowest rate. Eight weeks later, you find that you are not eligible for this indicator, due to his medical history. Instead, you have been approved for the rate (often much) higher. If you knew beforehand you would have chosen another company, using different criteria for underwriting.

The best way to demonstrate this, consider our hypothetical case:

John Doe is 45 years old man, smoker, who needs $ 500,000 of insurance coverage for 10 years. His injury is only a high level of cholesterol (290), offset by slightly higher ratio of cholesterol (4,0).

John wants to find that the company would give the lowest rates, guaranteed level for 10 years. To do this, he visited six sites, which were selected for sampling on Forbes, CNN / Money and a recent study by the Federation of American Consumers.

John refers to the company, which showed the lowest premium. (He said he could not apply to a company at the time).
Term-Life Insurance-Quote
Here's how the real price, offered by insurance companies, compared with life insurance quotes returned to the site - Click here to see how we have chosen sites.

Money Life Insurance

2009-12-24T06:04:00.001-08:00

Life Insurance
Updated: January 27, 2009
Hero Life Insurance --

If people are dependent on your income or care, you need life insurance. Choose the right size and buying the right company can save you a lot of money.

In this report we have considered "life" policy, which pays the insured amount if you die, the insurance in force. We also provide a handy calculator so you can see how life insurance you need.

Life Insurance 3

2009-12-24T06:00:00.001-08:00

Life Insurance

Life Insurance for providing some financial security for people who depend on you financially. There are different types depending on your situation.
Protection of the family and dependents

Life insurance is about providing some financial security for people who depend on you if you die if you do not have a partner, spouse or civil partner, children or other dependents, you do not need life insurance.

To be sure of buying the right amount of coverage, with the right conditions, you should get advice. For more information, see Getting financial advice. Counselor assesses that your family will need, and businesses around the cover that suits you best.

Always answer questions as best as possible and to disclose any existing medical conditions when asked. If you do not give the full facts, it could invalidate the policy and the insurance company does not pay.

There are two basic types of life insurance: term insurance and life insurance in the country.

Term insurance (also called the period of insurance) is paid if you die within a certain time, and the full benefit of life insurance when you die. Some whole life policies also contain an investment element to them, but such investment-type policies cost much more than insurance protection.

If you want investment, consider the full range of products (not just life insurance) which may meet your needs and circumstances - see investments of this site.
Term insurance

This is the easiest and least expensive type of life insurance, and is known as term insurance because you choose how long you cover, say, 10, 15 or 20 years (duration).

Term insurance only pays if you die during the term you have agreed. If you live longer than the period you will get nothing. As a couple, you can also purchase a term that covers both your names, with the political advantages, if any of you die during the term.

Things to watch

    * What are the policies that you want? For example,
          O benefit of family income (policy, which pays an income rather than a lump sum)
          Raising the policy (which includes the increase in contributions during the year)
          On reduction policies (including lower premiums over the years)
          On renewable policies (which can prolong the initial period).
    * Verify that the exception - in other words, when the policy will not be paid. For example, most do not cover death from alcoholism or drug addiction. You could not be covered, taking part in risky sports. If your health is seriously compromised if the policy starts, some causes of death may be excluded or you may be denied coverage entirely.
    * Premiums shown are usually fixed for the entire period. There are also contracts where premiums reviewed after a certain period, usually five years.
    * How flexible is the contract? Can you reduce or increase cover easily as your circumstances change? Are there additional costs to do? Do not apply to terminate immediately if you miss a payment, or is there a grace period?
    * For an additional payment, you can usually a waiver of premium. He pays a premium if you can not work due to prolonged illness, so that your shell has not been interrupted.
    * If you want to change insurer, check the level of premiums for a new contract before switching (premiums rose in May due to age or adult, because you have created a medical condition). Also check to a new level of coverage compared to the previous one. Different benefits may be available in May and various exceptions apply - for example, can not be covered for medical conditions that are designed to move, even if they fall under the previous contract. If you decide to change, make sure you do not cancel your original cover until you are fully covered by new contracts.
    * Policies may be established under trust. This means that in case of death, the proceeds of the policy are paid directly to the beneficiaries of your choice. Subject to the trust set up properly, can have advantages in that. However, the use of the trust may not be suitable for everyone and because of the difficulties we recommend you seek financial and legal advice. For more information, see Getting financial advice.

How much does it cost?

That depends on several factors, such as the amount of coverage you want, and the remaining term. Of course, it is also based on the risk of the insurer would pay: If you are a smoker and hazardous work, you'll pay more for a non-clerical smoking. Life insurance also costs more than men because on average they do not live that long. Always compare covering politics, not just the price. Someone may be cheaper than others, but they can not offer the same level of protection.
Term pension (ATP)

PTA is a type of term, which uses the rules for board to provide life insurance. You do not have to pay contributions to your retirement income, and instead they can be enrolled for life insurance coverage.

This type of insurance may run impact on how any other pension or you have to win. Keep in mind the PTA provides the durability of the coating - it is paid on death, and he does not give you a retirement income. For more information - see the warranty period of retirement.
The whole life insurance

In whole life insurance pays a certain amount when you die, when there is.

How much does it cost?

This policy will cost more, partly because they will pay when an event (death) happens, but also under various charges that come with them. The cost also depends on your lifestyle: If you are a smoker and hazardous work, you'll pay more for a non-clerical smoking. Life insurance also costs more than men because on average they do not live as long as women. Always compare covering politics, not just the price. Someone may be cheaper than others, but they can not offer the same level of protection.

Universal Life Insurance - Definition and Overview of Universal Life Insurance

2009-12-24T05:57:00.000-08:00

Definition: Universal life insurance is a type of permanent life insurance that is recommended by some insurance agents as an alternative to traditional college savings accounts.

Universal life insurance policies build a "cash value," depending on the amount the policyholder pays into the policy each premium period and the fluctuating interest rate the policy earns. Universal life insurance policies are very expensive compared to term insurance, typically paying the broker a commission of 70-90% on the first year's premium and as much as 5-10% on each subsequent year's premium. The recommendation to use universal life insurance as a college savings vehicle arises primarily from the fact that insurance policies are not counted as assets on the FAFSA form or as part of the Expected Family Contribution. This leads many parents to falsely believe that an insurance policy will help them to qualify for substantially more financial aid than they would by using other accounts such as a Section 529 plan. In reality, the costs (including surrender chargers) associated with a universal life insurance policy can quickly outweigh the small gains received in financial aid (if any). Variable universal life insurance (VUL), which is often marketed as a higher performing investment than standard universal life insurance, gives the insured the opportunity to invest in stocks rather than in a fixed rate account.

LIFE INSURANCE 2

2009-12-24T05:54:00.000-08:00

LIFE INSURANCE
The life insurance plan provides term life insurance coverage (no cash value) that is payable in the event of an employee death, thus giving the family or beneficiary financial protection.
Eligibility
Faculty and Staff are eligible for group life insurance coverage if they are employed in a “Regular” position with an FTE of .5 or greater or employed in a “Temporary” position for more than 6 months with an FTE of .5 or greater.
Initial Enrollment
New or newly eligible employees must enroll for coverage within 31 days of the hire or eligibility date.
Enrollment after the initial 31-day period is limited to the annual NUFlex enrollment or when a Permitted Election Change Event occurs.
Life insurance premiums are based on the employee’s age and tobacco/nicotine use. In order to determine the life insurance premium, the employee must complete the Tobacco/Nicotine Designation which is located on the Benefits Enrollment Form. If the employee does not designate a tobacco/nicotine status, life insurance coverage will be based on the tobacco/nicotine premium.
Employees may elect coverage Options 2-4 without proof of insurability. Coverage Options 5-13 require proof of insurability.
Tobacco/Nicotine Status Designation
Employees should initially designate their tobacco/nicotine status by completing the Benefits Enrollment Form. The Benefits Change Form should be used to change a tobacco/nicotine designation as a result of a Permitted Election Change Event.
Assurity Life Insurance has the right to investigate each death claim. If there is evidence of tobacco or nicotine use after the employee responded “No”, (not used any form of tobacco or nicotine within the last 12 months) and/or any material misrepresentation made by the employee, including their smoking history, the employee’s life insurance benefit payment may be voided pursuant to the policy’s Incontestable Clause.
Effective Date of Coverage
Coverage is effective on the first day of the month following the employee's date of hire or eligibility. Coverage for employees hired on the first day of the month will be effective on the first day of the month. Coverage for employees hired on the first working day of the month will be effective on the actual date of hire (if first working day is January 5th, coverage will be effective January 5th).
Employees must be actively at work on the effective date of coverage.
Change in Status Guidelines
Employees may change their life insurance coverage and/or tobacco/nicotine designation during the calendar year when a Permitted Election Change Event occurs. Proof of insurability is required to increase coverage due to a Permitted Election Change Event.
Employees must make changes in coverage within 31 days of the Permitted Election Change Event.
Listed below are several Permitted Election Change Events that may allow an employee to initiate a midyear life insurance coverage change.
Change in legal marital status
Change in number of dependent children
Change in employment status or work schedule which results in a gain or loss of coverage eligibility
Change in coverage under spouse’s employers’ benefits plan, if substantial
Coverage Effective Date as a Result of a Permitted Election Change Event
Coverage changes due to a Permitted Election Change Event are generally effective on the first day of the month following the date of the change. Changes however, that occur on the first day of the month will be effective immediately. See sections below for specific effective dates applicable to the different types of status changes. The employee may be required to furnish appropriate documentation to verify the Permitted Election Change Event.
Birth of a Dependent Child
Employee life insurance coverage changes due to a birth of a child will be effective on the first day of the month following the date of the child’s date of birth. Coverage changes due to a child born on the first day of the month will be effective immediately.
Adoption or Legal Guardianship
Employee life insurance coverage changes due to a dependent child who is added as a result of adoption or legal guardianship will be effective on the first day of the month following the date of the child’s adoption or legal guardianship. Coverage changes due to an adoption or attainment of legal guardianship which occurs on the first day of the month will be effective immediately.
Marriage
Coverage changes due to marriage will be effective on the first day of the month following the date of marriage. Changes for a marriage occurring on the first day of the month will be effective immediately.
Divorce, Legal Separation or Annulment
Coverage changes due to a divorce, legal separation or annulment will be effective on the first day of the month following issuance of a court decree, the actual date of divorce (6 month period following the court decree), or in cases of legal separation, date of the court order or separation agreement. There is no waiting period in Iowa so the change in status will be effective on the first day of the month following the date of the final court decree.
Annual NUFlex Enrollment
Employees may change a life insurance coverage option and/or tobacco/nicotine designation during the annual NUFlex enrollment. To maintain the integrity of the life insurance program and corresponding premiums, employees will be required to redesignate their tobacco/nicotine status every two years. The
Life Insurance Tobacco/Nicotine Designation Change Form should be completed to redesignate the tobacco/nicotine status.
Proof of insurability is required to increase coverage during the annual NUFlex enrollment.
An employee must be actively at work in order for the increased life insurance coverage to be effective.
Leave of Absence
Employees may continue life insurance coverage while on an approved leave of absence for up to two years. The Campus Benefits Office will collect the life insurance premium from the employee and forward to Assurity Life Insurance.
Active Military Duty Leave of Absence
An employee who commences a leave of absence for active duty in the military may cancel life insurance coverage during the leave. Upon return from active duty, the employee may reenroll for life insurance coverage, not to exceed the amount of coverage enrolled for prior to the leave, without proof of insurability or any waiting period. The employee may be required to provide documentation to support the date military service ended.
Termination of Coverage
Coverage terminates on the last day of the month following the date of termination or date the employee is no longer eligible for coverage. If the date of termination or employee’s coverage ineligibility is the last day of the month, coverage will terminate immediately.
Assurity Life Insurance Overview
Assurity Life Insurance Company’s origins are rooted in a century-long legacy of providing long-term security to policyholders that has earned generations of customers’ confidence and trust.
Assurity Life serves customers across the nation, offering disability income, critical illness and life insurance, annuities and specialty insurance plans through our representatives, worksite distribution and direct mail. Pension and investment management services are available through Assurity Advisors Inc., a subsidiary of Assurity Life.
With assets exceeding $2 billion, Assurity Life has built a reputation for “best in class” service and sound, conservative business practices with a disciplined approach to financial management. Headquartered in Lincoln, Neb., Assurity Life has earned a high rating from A.M. Best Company, the insurance industry’s leading independent analyst.
We’re proud of our history of integrity, financial accountability…and helping people through difficult times.
Visit the Assurity Life Insurance Home Page
Group Identification Number (Life Insurance)
G00406
Benefits Summary
The life insurance plan provides term life insurance coverage (no cash value) that is payable in the event of an employee death, thus giving the family or beneficiary financial protection.
Each life insurance option includes varying amounts of coverage with premiums based on the employee’s age and tobacco/nicotine use. Coverage amounts are reduced for employees age 70 and over. Premiums for coverage amounts exceeding $50,000 are withheld on an after-tax basis, i.e., subject to state and federal income taxes and Social Security.
Life insurance option 1 includes $15,000 of accidental death & dismemberment (AD&D) coverage. All other life options (2-13) include $25,000 of AD&D coverage. Accidental death & dismemberment coverage ends at age 70.
Critical Illness Benefit
Life insurance also includes a Critical Illness benefit equal to $5,000. This additional benefit will pay insureds a lump sum amount (benefit may be taxable for Option 1 and is nontaxable for Options 2-13) upon the first-ever confirmed diagnosis of several life threatening covered illnesses or medical
procedures including heart attack, open heart surgery, cancer, kidney failure, and stroke. Critical Illness insurance provides employees flexibility once a serious illness is encountered, which will avoid the need to access life savings for those expenses not covered by health insurance or disability. No enrollment is necessary to receive the Critical Illness insurance since it is part of the group life insurance policy.
Proof of Insurability
New hires or newly eligible employees applying for coverage requiring proof of insurability must complete a Statement of Health form. If all requested underwriting requirements are not completed within 90 days from the effective date of coverage, the application will be denied. The employee must wait until the next annual NUFlex enrollment to reapply for coverage.
Increasing coverage at the annual NUFlex enrollment requires the completion of a Statement of Health form. If all underwriting requirements are not completed by March 1, applications will be denied and the employee must wait until the next annual NUFlex enrollment to reapply for coverage.
Life insurance premiums for the total amount of coverage elected will be withheld beginning on the effective date of coverage. If coverage is denied, the employee should receive a premium refund up to the Guaranteed Issue Limit ($50,000) or the amount of coverage enrolled for prior to the requested coverage increase.
Any expense incurred for additional medical information as a result of the proof of insurability request will be paid by Assurity Life Insurance.
Beneficiary Designation
Employees should initially complete the Benefits Enrollment Form to designate a life insurance Primary Beneficiary. If desired, (but not necessary) a Contingent Beneficiary may be designated. Any subsequent designation change should be made by completing an Assurity Life Insurance beneficiary designation form. Beneficiary designation forms may be found on the University of Nebraska benefits Web page.
Conversion of Coverage
Life insurance coverage may be converted to an individual whole life policy upon termination of employment or ineligibility. A Notice of Right of Conversion of Your Group Life Insurance Policy form will be forwarded to each employee within 31 days of the termination or date the employee is no longer eligible. If death occurs during the 31 day conversion period, life insurance benefits will be paid to the beneficiary.

LIFE INSURANCE

2009-12-24T05:46:00.000-08:00

This classification provides coverage of establishments primarily engaged in underwriting life insurance. These establishments are operated by enterprises that may be owned by stockholders, policyholders, or other carriers.
NAICS Code (s)

524113 (Direct Life Insurance Carriers)

524130 (Reinsurance Carriers)
Industry Snapshot

The insurance industry in America, particularly the life insurance industry, is considered a pillar of the economy, with assets of $ 3.3 trillion in 2001. Tied as it is to the public interest, the life insurance industry has been subject to governmental scrutiny and legislation almost since its inception more than two centuries ago. There were about 1.549 companies that underwrote life insurance and annuities at the end of 2000, with premiums totaling $ 472 billion in 2001, compared to $ 405 billion in 1997. Thanks to an unprecedented level of consolidation in the late 1990s and early 2000s, the top 10 life and health insurance companies ACCOUNTED for more than 40 percent of these premiums in 2001.
Organization and Structure

Although insurance companies may operate according to similar principles, the life insurance industry is hardly homogeneous. Companies do not charge the same amount for premiums, do not charge for expenses the same way, do not pay the same amount of commission to sales agents, do not Provide the same kind or amount of training, do not sell the same products, and Equally are not solvent. The one commonality throughout the industry is that licensed life insurance salespeople act as agents for their companies. These agents write several different kinds of life products, or policies, that the company offers.

Companies usually have a number of field offices, or branches. Large insurance organizations strategically place these around the country so that agents may market to as many potential customers as possible. Agents order or issue policies, collect premiums, renew and change existing coverage, and help customers with questions or problems related to coverage. Many workers who previously worked for large life insurance organizations branch out on their own and become independent agents. They will often continue to retain the company they worked for to under-write the policies they sell.

Nearly all life insurance is issued by either stock or mutual life insurance companies. Mutuals have no stockholders, only policyholders, and the policyholders elect the board of directors who run the company. In this way, mutual policyholders participate in the fiscal management of the company and share in decisions regarding mortality expense, overhead costs, and investment rate of return. With $ 5.2 one billion worth of life insurance in force, mutual ACCOUNTED for 35.7 percent of all the life insurance in force with U.S. life companies in 1995. Stock Companies, on the other hand, are owned by their stockholders. They provided $ 9.4 one billion worth of life insurance, or 64.3 percent of the total. Other sources of life insurance include fraternal societies and the federal government. Taking all of these sources into account, there was $ 12.9 trillion of life insurance in force at the end of 1995, or an average of $ 131,600 per American household.

There are four major categories of life insurance: ordinary, group, industrial, and credit. Ordinary life insurance ACCOUNTED for approximately 60 percent of all life insurance in force at the end of 1995. More than doubling from 1985 to 1995, there was $ 7.5 trillion of ordinary life insurance in force in the United States at the end of 1995, with whole life insurance accounting for more than half of that total. Most of the rest of the ordinary life insurance in force was ACCOUNTED for by some type of term life insurance. From 1985 to 1995 the amount of group life insurance Increased from $ 2.6 trillion to $ 4.8 trillion, with term life accounting for nearly all group life insurance in force. Industrial life insurance decreased over the decade from $ 28.2 billion in 1985 to $ 20 billion in 1995. The amount of credit life insurance, Which is designed to pay the balance of loans in case the borrower should die, increased from $ 199.5 billion in 1993 to $ 231.3 billion in 1995.

Half of all full-time workers in commerce and industry in the United States are enrolled in retirement plans other than Social Security. Private pension plans are established by private agencies such as commercial, industrial, labor and service organizations, and nonprofit organizations. Individual Retirement Accounts (IRAs) or Keogh plans are set up by individuals. Pension plans can be administered by the holder of the plan, Placed with banks or trust companies, or insured with life insurance companies. At the end of 1995, life insurance companies with plans covered 65.4 million people and provided retirement income to 6.4 million people. More than 24 million people were covered by governmentadministered plans at the end of 1995. The Federal Old-Age and Survivors Insurance (OASI) system, part of the Social Security program, Remained the most comprehensive government retirement program offered. There were 173 million people eligible for Social Security benefits at the end of 1995.
Background and Development

Life insurance companies in the United States can be traced back to 1759, when "The Corporation for Relief of Poor and Distressed Presbyterian Ministers and of the Poor and Distressed Widows and Children of Presbyterian Ministers" was founded by the Synod of the Presbyterian Church. The oldest insurance company in the world, the firm is still fully operational as the Presbyterian Ministers' Fund. The industry Began to take on a more formal, mathematics-based foundation when, in 1789, Professor Edward Wigglesworth at Harvard prepared a modified table of mortality. This was the first crude attempt to scientifically predict the probability of risk, or to compute premiums and reserves on a scientific basis. Comparing the probability of risk to revenues generated from sales policy and the size of claim settlements has been the formula the industry has relied on to Establish itself as a viable business.

In 1794, the Insurance Company of North America Became the first general insurance company to sell life insurance in the nation, but the company sold only six policies and discontinued its operations in 1804. Nevertheless, the Pennsylvania Company for Insurance on Lives and Granting Annuities was incorporated in 1812 and Became the first company formed to issue life insurance policies and annuities. Soon after this the New York Life Insurance and Trust Company formed and Became the first company to employ life insurance agents. By the late 1840s, general insurance laws Began to come into effect, and in 1851 the state of New Hampshire established the first regulatory body to examine the affairs of insurance companies.

The insurance industry Became more structured as the nineteenth century progressed, a result of governmental legislation and self-regulation. Around 1857, the first pension fund for government employees were established, and in 1861, Massachusetts required nonforfeiture values as part of life policies. These and other covenants of the industry Began to Materialize when publications such as the American Experience Table of Mortality were issued (1868). Covering experiences from 1843 to 1858, this document Remained the most frequently consulted mortality table used by American companies until the 1940s. Whether or not the industry should have been granted national jurisdiction and been Compelled to abide by national or state regulations was a hotly Debated issue. It was not until 1869 that the U.S. Supreme Court held that insurance is not a transaction in commerce, Thus affirming the validity of state regulation of insurance.

Insurance Agents, the backbone and front-line of the industry, were first organized in Chicago in 1869. The issuance of life insurance is transacted by selling the customer an insurance policy. In 1873, the first weekly premium policy was issued, and the first industrial insurance agency system was introduced in the United States. The American Express Company played a very active role in Formulating use pension plans, as did the Baltimore & Ohio Railroad Company, Which set up the first formal pension plan supported by employer and employee contributions in 1880. This was followed by the establishment of cash surrender values mandated by law in Massachusetts in 1880, and the adoption of pension plans for professors at age 65 with a minimum of 15 years service. This represented the first private college retirement plan in the country. Later, the first pension plan for public school teachers was established in Chicago, and the Steel Company set up the first pension plan in a manufacturing company.

In 1911, the first group life insurance for employees was introduced. World War I prompted the federal government to get involved in insurance as well. Life Insurance for Servicemen was offered under the War Risk Insurance Act of 1917, subsequently known as U.S. Government Life Insurance. Soon after, the Federal Civil Service Retirement and Disability Fund was created by Congress. Another major advance in the insurance industry occurred in 1921, when Metropolitan Life Insurance Company issued the first group annuity contract. The Revenue Act of 1921 Deemed use contributions to profit sharing trusts to be tax-free. Provisions were extended to pension trusts in 1926. The first examinations of life underwriters, Those Who actually underwriter and issue policies as representatives of insurance companies, were held seven years later.

Regulation. As the industry developed, the federal government continued to ENACT legislation with far-reaching effects on the insurance industry. The Temporary National Economic Committee was charged with investigating the industry and making regular reports to Congress regarding its structure and development. Contrary to its previous decision, the U.S. Supreme Court in 1944 held that insurance is commerce and that, when conducted across state lines, interstate commerce and is subject to federal laws. In 1945, the McCarran-Ferguson Act declared that the regulation of insurance by states is in the public interest and granted an exemption from the antitrust laws to the extent that business is regulated by state law.

A major step for federal employees was achieved when the Federal Employees' Group Life Insurance Act of 1954 was introduced. This act ensured that federal employees would be provided group life insurance and accidental death and dismemberment insurance through private insurance companies. In 1965, the Servicemen's Group Life Insurance Act was introduced, Providing members of active duty in the uniformed armed services with group life insurance Underwritten by private insurance companies with the Veterans Administration. In 1976, the first individual variable life insurance policy was issued, followed by the first "universal" life insurance policy in 1977.

A lot was federal regulation Aimed at Insuring equal access to insurance regardless of age and sex. The Supreme Court in Norris vs. DECIDED. Arizona that employee retirement benefits based on contributions made after August 1, 1983, must be calculated without regard to the sex of the employee. The Retirement Equity Act of 1984 lowered the minimum age for participation and vesting purposes, insured that written consent of the spouse would be required before joint and survivor coverage may be waived under pension plans, and required the payment of a survivor annuity in case of a vested participant who dies before the annuity starting date.

The taxation of life insurance companies has always been a strongly contested issue. The Tax Reform Act of 1984 included universal life insurance within the definition of life insurance, Thus preserving its favorable tax treatment. Two years later, the Tax Reform Act of 1986 eliminated the tax deductibility of IRA contributions for highly paid people who are covered by pension plans. Also reduced was the maximum contribution to salary reduction, or 401 (k) plans, the deductibility of interest paid with respect to loans on corporate-owned life insurance policies was also limited. A year later, the Revenue Act of 1987 established more expedient funding requirements for under-funded pension plans, a variable rate premium and a lower full-funding limitation for qualified plans. Finally, in 1988 the Technical and Miscellaneous Revenue Act created a class of life insurance contracts, the policy loans and surrender payments of which are subject to tax rules similar to deferred annuities and made many changes related to 401 (k) plans.

The Bull Market. Assets of U.S. life insurance companies reached a record high of $ 2.1 trillion in December 1995. This represented an increase of 10.4 percent, or $ 201 billion, over 1994. Assets of U.S. life insurance companies were invested in corporate bonds, government securities, stocks, mortgages, real estate, policy loans, and other assets. U.S. Increased life insurance companies in their stock holdings by 32 percent over 1994.

Managers of insurance company investment portfolios were rewarded with a fairly stable year in 1996, after 1995 when interest rates rose dramatically. In November 1996 the Dow Jones Industrial Average broke 6500 for the first time. In the bond market, life and health insurers Increased their holdings of below-investment grade bonds to 6.1 percent of their fixed income portfolio, still well below the levels maintained during the late 1980s and early 1990s. Insurance investment in mortgage-backed securities continued to decline in 1996 as a percentage of fixed income portfolios, reaching 26 percent after being reduced to 30 percent in 1995 and 33 percent in 1994. Overall, the financial stability of the industry continued to improve.

Continuing its record-setting trend, life insurance in force reached a record high in 1995 of $ 12.6 trillion, an increase of 7.7 percent over 1994. Life insurance Remained by far the largest segment of all insurance sold. Purchases of individual and group life insurance in 1995 were $ 1.6 trillion. Traditional whole life insurance and combination ACCOUNTED for 55 percent of policies sold, a decrease from 58 percent in 1993. Universal and variable life insurance ACCOUNTED for 21 percent of new sales. Approximately 78 percent of all U.S. households owned some form of life insurance in 1994, and the average amount per insured household was $ 159,100.

The average size of life insurance policies sold also continued to increase. In 1995 the average new individual policy was $ 82,310, compared to $ 79,710 in 1994 and $ 75,350 in 1990. Approximately half of all new policies were bought in 1994 for people between the ages of 25 and 44, with 38 percent of insured Those buying term policies and 22 percent buying or variable universal life policies.

In the mid-1990s, the life insurance industry also Began Gradually letting go of the safest investment mentality, left over from bad real estate investments in the 1980s. More companies were looking to pump up the returns in their portfolios, usually consisting of common equities, public bonds, and commercial mortgages. The portion of stock holdings Began to rise and more companies holding Began commercial mortgages directly.
Current Conditions

Net premiums written in 2001 reached $ 472.7 billion for life and health insurance companies, compared to $ 405.6 one billion in 1997. Annuities, Which were virtually non-existent prior to the 1970s, accounted for more than 50 percent of total premiums in 2001. Individual and group life insurance ACCOUNTED for 26 percent of premiums, while health and accident insurance brought in another 20 percent. It was this reliance on annuities that propelled unprecedented growth in the life insurance industry at the turn of the twenty-first century as a booming economy prompted an unprecedented number of U.S. consumers to invest in retirement vehicles such as mutual funds and annuities. Net income for the industry reached a record $ 24.1 billion in 2000. However, the stock market plummeted in late 2000 and remained low throughout 2001, Which trend has undermined the entire investment industry and more than halved the life insurance sector's net income to $ 11.4 billion in 2001. The terrorist attacks on the World Trade Center towers in New York City that year, which costs the insurance industry dearly, were also a factor in this downturn.

Consolidation in the late 1990s and early 2000s allowed the industry giants to grow even larger. A record 51 mergers and acquisitions worth a total of $ 32 billion, took place among life insurers in 1998. Three years later, Although the total number of mergers and acquisitions Had fallen to 33, these deals grew in total value to $ 36.1 billion. In 2001 the top 10 life and health insurance firms in the United States ACCOUNTED for 41.1 percent of the market in terms of premiums written and 42.3 percent of the market in terms of assets. This compares to the 49.6 percent of the market held by the top 20 life insurers in 1995. In 2001 the top 10 U.S. life insurance companies, ranked by direct premiums, were American International Group, Inc. Hartford Life., Metropolitan Life, ING Group, AEGON USA Inc.. Prudential American Group of New York Life, Nationwide Group, Mass Mutual Financial Group, and GE Financial Insurance Group.

Many life insurance companies have set up mutual companies have taken the step toward demutualization as a means of capitalizing on the bullish stock market. Some companies have opted to move to a mutual holding company first, this allows the company to sell off subsidiaries in anticipation of becoming stockholder owned. In December of 2001, Prudential completed its demutualization, joining industry leaders like MetLife and John Hancock.

The Internet has changed how many industries conduct business, yet the life insurance industry was slowly embracing the Internet in 1999. Some companies have Had early success in this direct-selling environment, yet the industry as a whole spent only 3.5 percent of its revenue on information technology, and only 25 percent of the companies in the industry were selling on the Internet in the late 1990s. This is expected to increase in the early 2000s as customers become Accustomed to 24-hour-a-day, 7-day-a-week shopping opportunities.
Workforce

There were approximately 1.549 U.S. life insurance companies in operation in 2000. The number has decreased Steadily since 1988, when there were 2.343 companies.

Agents usually receive some sort of financial assistance from the companies they are affiliated with while they build a customer base. They are also usually Placed on a stipend or retainer, Which is often replaced by straight monthly retainer to cover expenses. Life insurance companies often help employees with basic expenses such as office furniture and supplies, though most workers cover their own travel, telephone, entertainment, and other expenses. Agents may receive commissions in two ways: a first-year commission for making the sale (usually 55 percent of the total first-year premium), or a series of smaller commissions paid when the insured country his or her annual premium (usually 5 percent of the yearly payments for nine years). Most companies will not pay renewal commissions to agents who resign.

Incomes of insurance agents vary greatly. Income depends on the agents' own skill and knowledge of the industry, as well as the strength of the industry and market. Each year, about 20,000 workers qualify for the "Million Dollar Round Table" by selling policies with a face value of more than $ 1 million. Agents in their first five to 10 years on the job earned an average of $ 42,000 in the early 1990s. Those with 10 or more years selling life insurance averaged $ 65,000 a year.
America and the World

Widely varying economic conditions, personal income levels, living and health standards, and other circumstances make it difficult to make direct comparisons of national levels of life insurance ownership between countries. One statistical measure that reduces the influence of these various factors is the ratio of life insurance in force to national income. This ratio has generally shown improvement in most countries since 1984. In the United States, for example, that ratio was 191 percent in 1994, indicating that the amount of life insurance in force in the United States equaled 191 percent of U.S. national income. In 1994, Japan led all nations, followed by Korea (349 percent), South Africa (250 percent), Canada (245 percent), Ireland (233 percent), and The Netherlands (220 percent). Other countries Whose life insurance in force exceeded their national income included Australia, France, Sweden, Norway, Denmark, and Germany.

Beyond 2000, U.S. life insurers face the prospect of having Increasingly larger global competitors operating in their own market. At the end of 1995, there were only three U.S. life insurers ranked among the top 10 insurers globally based on assets. Prudential ranked fifth in the world, followed by Teachers Insurance Annuity Association (TIAA / CREF) at eighth, and tenth at Metropolitan Life. Three of the top four largest insurers were based in Japan. Since 1950, when 74 percent of all insurance premiums originated in North America, the percentage of total premium has shifted away from the United States. By the mid-1990s, only 32 percent of all insurance premiums originated in North America and 68 percent came from the rest of the world.

U.S. life insurers have established international operations Largely through acquisitions and joint ventures. New opportunities were expected to open up in Europe toward the end of the 1990s, as European countries Began to Dismantle their welfare states and privatize such areas as pension coverage, health, and unemployment insurance. Latin America was a hot market for U.S. life insurers in the mid-1990s, as companies were Attracted by stabilizing economies, growing middle classes, and the privatization of some state-run pension programs. Aetna Inc., For example, was expected to invest as much as $ 390 million for a 49 percent stake in a joint venture with Brazil's largest insurer, Sul America Seguros. Other life insurers with expanded operations in Latin America included Metropolitan Life, ITT Hartford Group, New York Life and Principal Financial Group. The continued expansion in the late 1990s, when Aetna set up a joint venture with a Polish bank in 1999 to sell retirement products in Poland and formed a new Prudential life insurance company in Argentina.

While U.S. companies looked to expand overseas sales, many European companies looked to the United States as fresh markets for their products. In 1999 two European companies announced plans to acquire U.S. insurers-by Transamerica and Aegon USA by Allianz Life.

Variable Universal Life

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Variable universal life insurance policies contain fees and expenses, including cost of insurance, administrative fees and premium loads, surrender charges and other charges or fees that will impact policy values. The underlying funds also have fund operating expenses. The investment return and principal value will fluctuate so that when redeemed, may be worth more or less than their original cost.

Variable Universal Life (VUL) insurance is permanent life insurance that provides death benefit protection with the ability to build cash value. You decide how to invest your net premium among the investment options offered for the policy, or you can choose a professionally-developed asset allocation option based on your investment goals, risk tolerance and time horizon.

Where does VUL get its name?

The policy is “variable” because its cash value will vary according to the performance of the investment options you choose.
“Universal” refers to the policy's flexible premiums. You can set your premium amount and payment schedule, provided they are sufficient to support the death benefit and sustain the policy.

Who may have a need for VUL?

Most VUL customers are looking for death benefit protection for their families and either:

have concerns about the future of their estate or business, or
are looking for a means to supplement retirement income.

What are the benefits of VUL?

A VUL policy can help you prepare for the future of your family, your business and your legacy.

Protection for you and your family

Obtain death benefit protection
Replace your income in the event of your death
Plan ahead for a loved one with special needs
Supplement your retirement income

Protection for your business

Plan for continuation of your business in the event of your death

Estate planning

Help protect savings and the total value of your estate for future generations
Create liquid assets to help pay for estate taxes
Transfer wealth on a tax-efficient basis
Leave a legacy to charity

How does a VUL policy work?

Your premium payments, after fees, are allocated to the investment options you choose. The performance of your investment options impacts your policy's account value and can help support the death benefit. You can also access the policy account value through loans and withdrawals to fund present and future needs. And, upon your death (second insured for survivorship product), your beneficiaries will receive a death benefit.
Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy's Account Value and Death Benefit. Depending upon the performance of a VUL policy's investment choices, the Account Value may be worth more or less than the original amount invested in the policy. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the extent that they exceed the policyowner’s cost basis in the policy and usually loans are free from current Federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to Federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions.
You should carefully consider the investment objectives, risks, and charges and expenses of any variable universal life insurance policy and its underlying funds before investing. This and other information can be found in the prospectus for the variable universal life insurance policy, the prospectuses for the underlying funds and appropriate product information, which can be obtained from your financial professional or by calling (800) 231-5453. Please read them carefully before you invest or send money.

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries, including the issuing companies of Hartford Life Insurance Company (HLI) (New York) and Hartford Life and Annuity Insurance Company (HLA) (Outside New York), Simsbury, CT. The mailing address for both issuers is PO Box 2999, Hartford, CT 06104-2999.

Variable life insurance products discussed in this material are distributed by Hartford Equity Sales Company, Inc. (HESCO), a broker/dealer affiliate of The Hartford.

Universal Life Insurance

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Universal Life Insurance

Universal Life Insurance is designed for those with sophisticated financial and insurance needs. The flexibility it provides can help you meet a wide array of insurance objectives from the most basic to the most complex.
Universal Life Insurance may be most advantageous:

When you need premium and death benefit flexibility.
When you want the investment performance of Northwestern Mutual’s general account.
When you want the opportunity to easily adjust the policy after issue.

A universal life insurance contract allows you to protect against risks for today and in the future. The premium and death benefit flexibility of universal life insurance give you the ability to match your protection to your needs, whatever they may be down the road. The cash value can also help you meet a variety of other financial objectives.
Estate Planning Strategies
Uncertainty of estate tax laws has made estate planning more challenging than ever. While this uncertainty has caused some to postpone estate planning needs, doing so may jeopardize the financial future of family and/or businesses.
Universal life insurance can help you achieve the financial security that comes from protecting and preserving the estate you’ve built over your lifetime. Its flexibility allows you to adjust the policy when changes in estate tax legislation, your financial situation or any other circumstances trigger a need to review your estate planning strategy.
Business Planning
A universal life insurance contract’s ability to accumulate cash value on a tax-deferred basis can provide solutions for a variety of financial and insurance needs.
Because of the great amount of flexibility, its design works especially well with:

Buy/Sell Arrangements
Key Person coverage
Nonqualified Executive Benefit Programs
Endorsement Split Dollar Plans
General Corporate Liability Funding
Financing Employee Stock Ownership Plans

Charitable Gifting
If properly structured, giving a life insurance policy to a charity may not only provide benefits to the organization, but immediate income tax benefits to the donor as well. A universal life insurance contract’s premium flexibility allows you to decide on the amount of your charitable contribution on a year-by-year basis.

Thrivent Financial Universal Life Insurance II offers

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Stability – The minimum guaranteed interest rate for your accumulated value helps ensure long-term growth that helps protect against inflation. Your accumulated value is guaranteed to earn at least 3% annually (increasing to 3.25% annually starting in year 11).
Flexibility – You can adjust premium payments and your coverage to fit the changes in your life.
Customization – You may add optional benefits to your life insurance contract for an additional cost.
- Consolidation ability – Consolidate coverage for the entire family to cover short-term needs on one contract, with a Term Life Insurance Benefit, Spouse Term Life Insurance Benefit, or Child Term Life Insurance Benefit.
- Waivers – Coverage continues even if you become disabled. Choose a Disability Waiver of Monthly Deduction Benefit, Disability Waiver of Selected Amount Benefit, or Applicant Waiver of Selected Amount Benefit.
- Additional coverage – Add or increase coverage to meet life's changes with an Annual Increase Benefit, Guaranteed Increase Option Benefit, or Accidental Death Benefit.
Accessibility – You decide how and when to use your accumulated value to meet your financial goals. Use the accumulated value to supplement retirement income, pay college costs, transfer wealth to your heirs, or for charitable giving.

Contract loans are available at any time, subject to interest charges. After you have owned your contract for 10 years, the interest rate on any outstanding or new loans may be reduced. Partial surrenders allow you to withdraw a portion of accumulated value as long as enough cash surrender value remains to keep the contract in force. Contractual charges may apply.
While these options help make your Universal Life Insurance II contract more flexible, partial surrenders and/or unpaid debt will reduce your death benefit and the accumulated value available to pay your insurance costs, and may result in the lapse of your contract. A significant taxable event may result if the contract lapses with outstanding debt. Your tax advisor can provide more details.
No-Lapse Guarantee – This product offers two No-Lapse Guarantees¹ to ensure that your coverage will remain in effect regardless of any changes to the credited interest rate or cost of insurance as long as you pay sufficient premiums:
- Automatic 10-Year No-Lapse Guarantee.
- Optional Extended No-Lapse Guarantee, which ensures that your coverage remains in force to age 121 (must be selected at time of contract purchase).

Thrivent Financial Universal Life–Lifetime Protector

Stability – Guaranteed death benefit protection for up to a lifetime with competitive premiums.
Simplicity – Your contract will remain in force as long as you fund it appropriately according to the terms of your contract.
Customization – A simple life insurance solution with the most frequently asked for options, helping you customize your coverage (available for extra costs).
- Waivers: Coverage continues even if you become disabled. With the Disability Waiver of Monthly Deductions Benefit, the monthly deductions of your life insurance contract will be waived, as well as any optional riders included on the contract. This benefit will become payable if you become totally disabled under the terms of the rider and your disability continues for six months or longer².
- Additional coverage option – The Accidental Death Benefit will pay an additional amount in the event of your accidental death. You'll have the comfort of knowing that additional funds will be paid to assist your family with unexpected financial costs.
- Increased coverage option – The Guaranteed Increase Option Benefit ensures that you will be able to increase your coverage at designated times in the future, regardless of your health. Coverage increases are available at specific ages or upon certain life events³.
Lapse Protection – Helps ensure your contract will remain in effect, even if the cash surrender value is insufficient to cover the monthly deductions.

Note that missing a premium payment, paying a reduced amount, or paying it late can shorten the guarantee period of the Lapse Protection benefit. Loans and withdrawals can also shorten the guarantee, so they are not recommended.
To guarantee the contract will remain in force when the cash surrender value is insufficient to do so, it is important to pay your premium payments when due. This helps ensure that the Lapse Protection balance⁴, minus any loan payoff, will be at least equal to zero, if not greater.

Talk to Us About Life Insurance

Contact a Thrivent Financial representative for costs and complete details of coverage. Like most insurance contracts, our universal life insurance products have exclusions, limitations, reductions of benefits and terms under which the contract may be continued in force or discontinued.
Please note that neither Thrivent Financial for Lutherans nor any of its agents give legal or tax advice. The brief discussion of taxes in this section is neither complete nor necessarily up-to-date; the laws and regulations are complex and subject to change. A transfer of the contract, a change in the owner or change in the beneficiary may have tax consequences depending on the particular circumstances. For complete details, consult with your attorney or tax advisor. The description of benefits in this section is brief and does not constitute, in itself, a contract.
Contract Forms: U-UM-UL (07), ICC07-U-UM-UL, U-UP-UL (06) Series
Guarantees are backed by the financial strength and claims-paying ability of Thrivent Financial for Lutherans.

¹ To guarantee the contract will remain in force when the cash surrender value is insufficient to cover the monthly deductions, the accumulation of premiums paid, less any partial surrenders and debt, must at least equal the accumulation of No-Lapse Guarantee premiums. By paying only the premium required to maintain the No-Lapse Guarantee, you may forgo the opportunity to build significant accumulated value. Loans, surrenders, changes in death benefit options, changes in premium payments, and/or adding riders can have a serious impact on the ability of the No-Lapse Guarantee to remain active. Upon termination of the No-Lapse Guarantee, you may have to pay significantly higher premium to keep the contract in force. The No-Lapse Guarantee has no cash surrender value.

² Limitations and exclusions may apply.

³ Increases to coverage will result in increased monthly deductions and new decrease charges.

⁴ The Lapse Protection Balance is a calculation based on a set of alternate cost-of-insurance, interest-rate and expense charges, all disclosed in the contract. Contract guarantees are based upon the claims-paying ability of the insurer.

Insurance Products and Services

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Universal Life Insurance

More Options, But Fewer Guarantees

Universal Life Insurance is permanent insurance that provides protection in case of death, as well as a savings or cash value component. The cash value of a universal life policy is based on the amount of premiums you pay, the declared interest crediting rate and the policy charges. Unlike Term Life insurance or Whole Life insurance flexible premium universal life policies permit flexibility in the amount and timing of premium payments (within limits), and they generally offer you the ability to vary the death benefit amount based on your circumstances. However, some policies include a No Lapse Guarantee that guarantees your policy will not lapse for a specific period of time as long as required premium levels are met. Such policies offer less premium and death benefit flexibility.
Universal Life Insurance costs less than Whole Life, and offers more flexibility in the timing and amount of premium payments. In general, there are fewer guarantees with regard to cash value or death benefit.

Premium payments are flexible. After initial payment, you make additional premium payments at virtually any time and in any amount (subject to certain minimums and maximums). Note: Policies with No Lapse Guarantees have greater restictions on the amount and timing of permium payments.
Your policy continues as long as there is enough cash value to cover monthly insurance charges or if the No Lapse Guarantee is in effect.
Cash value earns interest at a rate set periodically by the insurance company and is generally guaranteed not to drop below a certain level. Policies with No Lapse Guarantees tend to have less cash value.

You can generally choose one of two death benefit options:

Level benefit equal to the policy’s original Face Amount, OR
Variable benefit equal to the original Face Amount plus any existing policy account value.

Advantages of Universal Life Insurance

Potentially lower initial premium compared to Whole Life Insurance
Potential availability of a No Lapse Guarantee
You can generally determine the amount and timing of premium payments, within certain limits
You can generally increase or decrease the Face Amount. Note: Increases may require evidence of insurability and decreases may result in the imposition of pro rata surrender charges.

Disadvantages of Universal Life Insurance

Fewer guarantees than Whole Life Insurance
Skipping payments can lead to policy funding problems
Adding guaranteed features, like a No Lapse Guarantee, can increase the cost of Universal Life
Growth in cash value in the policy is limited
No investment flexibility
A decrease in the death benefit amount may result in the imposition of pro rata surrender charges

Life insurance is issued by AXA Equitable Life Insurance Company (NY, NY). Universal life insurance is co-distributed by AXA Distributors, LLC and AXA Advisors, LLC, members FINRA, SIPC. AXA Equitable, AXA Distributors and AXA Advisors are affiliated companies and do not provide legal or tax advice. All guarantees are based on the claims-paying ability of AXA Equitable. The guarantees do not apply to investment portfolios.

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Universal Life Insurance

More Options, But Fewer Guarantees

Universal Life Insurance is permanent insurance that provides protection in case of death, as well as a savings or cash value component. The cash value of a universal life policy is based on the amount of premiums you pay, the declared interest crediting rate and the policy charges. Unlike Term Lif. insurance or Whole Life insurance flexible premium universal life policies permit flexibility in the amount and timing of premium payments (within limits), and they generally offer you the ability to vary the death benefit amount based on your circumstances. However, some policies include a No Lapse Guarantee that guarantees your policy will not lapse for a specific period of time as long as required premium levels are met. Such policies offer less premium and death benefit flexibility.
Universal Life Insurance costs less than Whole Life, and offers more flexibility in the timing and amount of premium payments. In general, there are fewer guarantees with regard to cash value or death benefit.

Premium payments are flexible. After initial payment, you make additional premium payments at virtually any time and in any amount (subject to certain minimums and maximums). Note: Policies with No Lapse Guarantees have greater restictions on the amount and timing of permium payments.
Your policy continues as long as there is enough cash value to cover monthly insurance charges or if the No Lapse Guarantee is in effect.
Cash value earns interest at a rate set periodically by the insurance company and is generally guaranteed not to drop below a certain level. Policies with No Lapse Guarantees tend to have less cash value.

You can generally choose one of two death benefit options:

Level benefit equal to the policy’s original Face Amount, OR
Variable benefit equal to the original Face Amount plus any existing policy account value.

Advantages of Universal Life Insurance

Potentially lower initial premium compared to Whole Life Insurance
Potential availability of a No Lapse Guarantee
You can generally determine the amount and timing of premium payments, within certain limits
You can generally increase or decrease the Face Amount. Note: Increases may require evidence of insurability and decreases may result in the imposition of pro rata surrender charges.

Disadvantages of Universal Life Insurance

Fewer guarantees than Whole Life Insurance
Skipping payments can lead to policy funding problems
Adding guaranteed features, like a No Lapse Guarantee, can increase the cost of Universal Life
Growth in cash value in the policy is limited
No investment flexibility
A decrease in the death benefit amount may result in the imposition of pro rata surrender charges

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Similar life insurance types

A similar type of policy that was developed from universal life policies is the variable universal life insurance policy, or VUL. VUL's allow the cash value to be directed to a number of separate accounts that operate like mutual funds and can be invested in stock or bond investments with greater risk and potential reward. Additionally, there is the recent addition of Equity Indexed Universal Life contracts analogous to Equity Indexed Annuities that invest in Index Options on the movement of an Index such as the S&P 500, Russell 2000, and the Dow (to name a few). These type of contracts only participate in the movement of Index and not the actual purchase of stocks, bonds or mutual funds. They may have a cap (but not always) as to the maximum amount they will credit interest to and a minimum guarantee which keeps the principal of the contract from losing money in a down year. Typically each year the starting point is last year's ending point which means that: (1) the policy amount is locked in at the end of the year; and, (2)the beginning value from which the movement measured is reset.
Universal life is similar in some ways to, and was developed from whole life insurance.^[1] The potential advantage of the universal life policy is in its flexibility and the potential for greater cash value growth if the interest rates offered outperform the insurer's general account (that whole life policy cash value growth is based on). Universal life is more flexible than whole life in two primary ways: the death benefit and usually the premium payment are flexible. The death benefit can be increased (subject to insurability) and decreased without surrendering the policy or getting a new one as would be required with whole life. Also a range of premium payments can be made to the policy, from a minimum amount to cover various guarantees the policy may offer to the maximum amount allowed by IRS rules. The primary difference is that the universal life policy shifts some of the risk for maintaining the death benefit to the insured. In a whole life policy, as long as every premium payment is made, the death benefit is guaranteed to be paid if the insured dies. In a UL the policy will lapse (the death benefit will no longer be in force) if the cash value or premium payments are not enough to cover the cost of insurance. To make their policies more attractive insurers often add guarantees, where if certain premium payments are made for a given period, the policy will remain in force for the guarantee period even if the cash value drops to zero. There are two other areas that differentiate Universal Life from Whole Life Insurance. The first is that the expenses, charges and cost of insurance within a Universal Life contract are transparently disclosed to the insured, whereas a Whole Life Insurance policy has traditionally hidden this type of information from the policyholder. Secondly, there are more flexible provisions within a Universal Life contract including zero interest or wash loans which in limited cases can provide the policyholder the ability to access the growth inside the contract without paying income tax. However if the policy lapses while the growth has been withdrawn, there may be substantial income tax owed.

Uses

Universal Life is used as a tax-advantaged way to purchase life insurance. In the early years of the contract, the premium far exceeds the cost of insurance (COI) charges. The difference between the two (the "cash value") will grow tax-deferred so long as the policy remains in force. If the policy is held until death, the cash value will escape taxation entirely. This is because the premiums are paid with after-tax money, so the money going in has already been taxed, and only growth would be taxed. However, since you only pay taxes on the growth of an investment, and you rarely see growth relative to premiums paid, the money in the end is able to escape taxation. Also the death benefit of life insurance policies generally does not face income tax as long as certain circumstances don't occur.

Types

Single Premium

Single Premium UL is paid for by a single, substantial, initial payment. The policy remains in force so long as the COI charges have not depleted the account. Since changes in the tax code, this type of policy is now called a "Modified Endowment Contract (MEC)" and is subject to less advantageous tax treatment. All policies paid up in 5 or less years are subject to this same negative tax treatment. While the premiums and accumulation will be taxed just like an annuity upon withdrawing, the accumulations will grow tax deferred and will still transfer tax free to the beneficiary under Internal Revenue Service Code 101a under certain circumstances.

Fixed Premium

Fixed Premium UL is paid for by periodic premium payments. Generally these payments will be for a shorter period of time than the policy is in force; for example payments may be made for 10 years, with the intention that thereafter the policy is paid-up. If the experience of the plan is not as good as predicted, the account value at the end of the premium period may not be adequate to continue the policy as originally written. In this case, the policyholder may have the choice to either:

Leave the policy alone, and let it potentially expire early (if COI charges deplete the account), or
Make additional or higher premium payments, to keep the death benefit level, or
Lower the death benefit.

Many universal life contracts taken out in the high interest periods of the 1970s and 1980s faced this situation and lapsed when the premiums paid were not enough to cover the cost of insurance.

Flexible Premium

Flexible Premium UL allows the policyholder to determine how much they wish to pay each time premium is due. In addition, Flexible Premium UL may offer a number of different death benefit options, which typically include at least the following:

A level death benefit (often called Option A or Option 1, Type 1, etc), or
A level amount at risk (often called Option B, etc). This is also referred to as an increasing death benefit.

Policyholders may also buy Flexible Premium UL with a large initial deposit, thereafter making payments irregularly.

Criticism

Unlawfully sold as an Investment

In the US it is illegal to offer Universal Life Insurance as an "investment," but it is frequently offered by agents as a tax-advantaged financial vehicle from which they can borrow as needed later without tax penalties. This also makes it an alternative for individuals who are not able to contribute to a Roth IRA due to IRS income restraints.
Actually this last part isn't true. you can use it as a savings for certain situations. It may be illegal in certain states but not in California.