Premiums and Benefits - Cash Value

  • Mr. Reyna said the policy overview should help consumers understand how cash value accumulates and can work to their advantage over time.
  • Mr. Wicka acknowledged that the issue is complicated because a lot depends on how the policy is funded; however, just the knowledge that the policy has cash value could be helpful information for a consumer comparing a term policy to a whole life policy.

2017 1116, LIIIWG CC.  2017-3

  • G. “Policy value” means the amount to which separately identified interest credits and mortality, expense, or other charges are made under a universal life insurance policy."
  • Drafting Note:  Care should be taken not to place undue emphasis on the policy or “account” value. Very often the policy value is not directly available to the policyowner.
    Instead, the policy value is an intermediate step used to determine benefits actually available to the policyowner such as cash surrender values, net cash surrender values, death benefits, or maturity values. The benefits actually provided the policyowner should be considered in establishing valuation and nonforfeiture standards.
  • The benefit charges <Cost of Insurance> shall include the charges made for mortality and any charges made for riders or supplementary benefits for which premiums are not paid separately.

NAIC Universal Life Model Regulation 

  • According to the Illustration, "[c]ash value accumulation is important because it is used to pay insurance costs and other charges (monthly deductions) necessary to keep the policy in force and because it can also be withdrawn to help meet a policyowner's other financial needs. . . ." Id

2008 - Legal Case - Blumenthal v New York Life

PLAINTIFF'S RESPONSE TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND BRIEF IN SUPPORT
Case 5:08-cv-00456-F - Document 85 - Filed 06/01/10 - Page 10 of 37

6. THE CONCEPT OF THE BENEFIT GENERATING ACCOUNT

  • We have mentioned several times that the function of the account value is to determine future benefits. 

1983 - Universal Life Valuation and Nonforgeiture: A Generalized Model, Shane A. Chalke and Michael F. Davlin, Society of Actuaries - 72p