{"id":926,"date":"2015-01-20T16:44:35","date_gmt":"2015-01-20T22:44:35","guid":{"rendered":"http:\/\/www.ssc.wisc.edu\/~jfrees\/?page_id=926"},"modified":"2015-03-29T17:43:07","modified_gmt":"2015-03-29T22:43:07","slug":"1-introduction-to-universal-life","status":"publish","type":"page","link":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/actuarial-mathematics\/universal-life\/1-introduction-to-universal-life\/","title":{"rendered":"1. Introduction to Universal Life"},"content":{"rendered":"<p>A <strong>Universal Life<\/strong> (UL) contract combines life insurance with an investment product in a transparent, flexible format. The policyholder may vary the amount and timing of premiums, within some constraints. Here is how it works:<\/p>\n<ul>\n<li>The <strong>premium<\/strong> is deposited into an account, which is used to determine the death and survival benefits.<\/li>\n<li>The insurer credits <strong>interest<\/strong> to the account at regular intervals (typically monthly).<\/li>\n<li>The account, made up of the premiums and credited interest, is subject to deductions for management <strong>expenses<\/strong> and for the cost of <strong>life insurance<\/strong> coverage.<\/li>\n<li>The account balance or <strong>account value<\/strong> (AV) is the balance of funds in the account.<\/li>\n<\/ul>\n<p>The account value represents the insurer&#8217;s liability, analogous to the reserve under a traditional contract.<\/p>\n<ul>\n<li>Universal Life (UL) policies are sold as &#8220;permanent&#8221; life contracts (with tax advantages)<\/li>\n<li>The AV represents the underlying value of the contract, and is used to determined the cash value<\/li>\n<\/ul>\n<p>With the UL, the policyholder&#8217;s money is not associated with specific assets, they are held in &#8220;notional&#8221; accounts. Credited interest declared need not reflect actual earnings<\/p>\n<p>In contrast, the <strong>Variable Universal Life<\/strong> (VUL), monies are held in separate accounts. Interest credited is directly associated with the yields on these funds. This is studied in Chapter 12 of DHW (but not by us).<\/p>\n<p><div class=\"alignleft\"><a href=\"https:\/\/users.ssc.wisc.edu\/~ewfrees\/actuarial-mathematics\/universal-life\/\" title=\"Universal Life\">&#9668 Previous page<\/a><\/div><div class=\"alignright\"><a href=\"https:\/\/users.ssc.wisc.edu\/~ewfrees\/actuarial-mathematics\/universal-life\/1-introduction-to-universal-life\/origins-of-universal-life\/\" title=\"Origins of Universal Life\">Next page &#9658<\/a><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Universal Life (UL) contract combines life insurance with an investment product in a transparent, flexible format. The policyholder may vary the amount and timing of premiums, within some constraints. Here is how it works: &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":923,"menu_order":0,"comment_status":"closed","ping_status":"open","template":"","meta":{"jetpack_post_was_ever_published":false},"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/P8cLPd-eW","acf":[],"_links":{"self":[{"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/pages\/926"}],"collection":[{"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/comments?post=926"}],"version-history":[{"count":4,"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/pages\/926\/revisions"}],"predecessor-version":[{"id":2772,"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/pages\/926\/revisions\/2772"}],"up":[{"embeddable":true,"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/pages\/923"}],"wp:attachment":[{"href":"https:\/\/users.ssc.wisc.edu\/~ewfrees\/wp-json\/wp\/v2\/media?parent=926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}