• Let us look at the question of splitting a life policy into its term and savings elements as an example of injecting the consumer's viewpoint into the current "great debate."
• Let us assume that a customer wishes to buy insurance protection for a ten-year period and wants to pay level annual premiums.
  • He can purchase a ten-year term policy or a ten-year endowment policy.
  • From a consumer's viewpoint the savings element in the ten-year endowment policy is obviously the difference in premiums between the two contracts.
  • If a customer wants thirty years of protection, and wants to pay level annual premiums, then he might choose between two policies: a thirty-year term with minimum cash values and a thirty-year endowment policy.
  • ⇒ Despite the fact that there are cash values in the thirty-year term contract, from a consumer's viewpoint it has no savings element.
  • All of the premium is required to provide the thirty years of protection.
  • The savings element in the thirty-year endowment is the difference in the premiums of the two contracts.

--  Paul Overberg

1973 - SOA - Price Disclosure and Cost Comparison, Society of Actuaries - 186p