First Commitment - Product Universe
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The product type and how it is funded determines the potential risk and performance of your insurance.
There are four main product universes to choose from:
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Whole Life Universe
(current interest credited/participating whole life)- Premiums are generally guaranteed not to change at the illustrated rate.
- Face amount of the contract is generally guaranteed not to go below a specific amount if the guaranteed premium is paid.
- Substantial floor guarantees as to cash value and death benefit.
- When policy experiences favorable interest earnings and mortality, the favorable experience is credited directly to the policy or through dividends.
- Favorable interest and mortality significantly increases cash value and death benefit per dollar of premium.
- While premiums are due and payable each year, whole life can give flexibility if out-of-pocket premiums need to be reduced or skipped since the cash value can be applied to pay premiums.
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Universal Life Universe
- Premiums, cash value, and death benefit are not guaranteed at the illustrated rate.
- Offers flexible premium.
- Face amount of the policy can be guaranteed not to go below a specific amount if a specified premium is paid.
- Offers potential to accumulate higher cash value per premium dollar than whole life.
- Generally less substantial floor guarantees as to interest credited on cash value.
- Does not have a scheduled guaranteed cash value. As a result, there may not be sufficient cash value to allow out-of-pocket premium reduction or skipping.
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Variable Universal Life Universe
- Premiums, cash value, and death benefit are not guaranteed at the illustrated rate.
- Offers potential to accumulate the highest cash value per premium dollar.
- Policyowner is responsible for allocating cash values among sub-accounts.
- Have the fewest guarantees and greatest volatility because the policyowner, rather than the insured, bears the investment risk.
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Temporary Coverage Universe (Term)
- Provides highest death benefit per premium dollar.
- Premiums generally increase over time.
- Becomes more expensive than a permanent contract.
- Coverage not available at life expectancy.
Next Step: Once you have decided on the product, decide whether you want to make a high, mid-range, or low annual premium.
Second Commitment
- Premium Level
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