Life Insurance and Annuities

8 TERM WHOLE UNIVERSAL VARIABLE VARIABLE UNIVERSAL Premium Low; but increase w/age Level Flexible Level Flexible Face Amount Renewable into old age Level; can’t be changed Level; can vary Level; can’t be changed Level; can vary Cash Value None Yes; no ability to to choose invest- ments Yes; no ability to to choose investment Yes; ability to choose invest- ments Yes; ability to choose investments Policy Loans No Yes Yes Yes Yes Cash values are accumulated by crediting premium payments and interest to a fund from which deductions are made for expenses and cost of insurance. Interest rates are linked to an external index such as Treasury bills. Because the cash value element of this type of policy is interest-rate sensitive, predictions of future costs are highly dependent upon the accuracy of interest rate projections. The policy can also be structured to operate like term insurance. • Variable Life Insurance has a death benefit that varies in relation to the investment experience of the assets underlying the policy. A higher rate of return on the invested fund will cause the death benefits to increase, while a low or negative rate will cause the death benefits to decrease. • Variable Universal Life Insurance combines the flexibility of universal life insurance with the investment account features of variable life insurance. Below is a chart that describes the different policy types: