Current Assumption Whole Life
- imms.com/members/3rdparty/AmerCol/lifebook/chap5f.htm - Current Assumption Whole Life
- Current assumption whole life is a variation of traditional whole life that lies somewhere between adjustable life and universal life.
- Its cash value development is more like that of universal life than any other policy.
- It has a redetermination feature that essentially recasts the premium amount, and in some instances the death benefit, in reaction to the most recent interval of experience. That interval varies from one company to another but is frequently 5 years, although it can be as short as 2 years or as long as 7 years.
- The main feature that differentiates current assumption whole life from universal life is the absence of total premium flexibility in the renewal years (see figure 5-9).
- interest-sensitive whole life policy - When mortality and expense charges are guaranteed, the policy is often referred to as an interest-sensitive whole life policy because excess interest (credited interest minus guaranteed interest) credited to the cash value becomes the only nonguaranteed element in the contract.
- indeterminate premium whole life policies - Because many of these designs periodically recast the premium amount based on recognition of the most recent interval of experience, some of these policies are referred to as indeterminate premium whole life policies.
- The idea is that there is a guaranteed maximum possible premium that could be charged, but the actual mortality interest and expenses give rise to lower premium amounts actually being assessed as a result of favorable experience under the policy.