Table C Life Insurance Policy Comparison Chart - Life Health

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life insurance planning
Figure 1.3
Table C
LIFE INSURANCE POLICY COMPARISON CHART
CV AND/OR
DIVIDENDS
DEATH
CASH
USE CURRENT
PRODUCT
CHARACTERISTICS
MARKET
BENEFIT
PREMIUM
VALUE (CV)
INTEREST?
Annual
“Pure” life insurance with no
Short to intermedi-
Fixed, level.
Fixed, increasing.
No cash value.
N/A
Renewable
cash value element; initially,
ate term need;
Term
the highest death benefit for
need max. death
the lowest premium.
benefit for min.
initial premium.
Participating
Most common and easily
Anybody who
Fixed, level.
Fixed, level.
Fixed with min.
Yes.
Ordinary
understood form of lifetime
needs lifetime
guaranteed interest
Life
coverage; known max. cost
coverage.
rate; excess
and min. death benefit
through dividends.
levels; dividends may
reduce premiums, pay-up
policy, buy paid-up additions,
accum. at interest, be paid
in cash.
Current
Mixes characteristics of
Upper and middle
Fixed, level.
May change
May change
Yes.
Assumption
universal life and tradi-
income prospects.
based on
based on insurer’s
Whole Life
tional ordinary life;
insurer’s experi-
experience; guar-
future premiums, face
ence; Max.
anteed min.; Min.
amount, and/or cash value
guaranteed but
guaranteed interest;
based on interest, expense,
insurer may
excess lowers
mortality experience.
charge less.
premium or in-
creases CV.
Variable
Whole life contract with
Upper and middle
Guaranteed
Fixed, level.
Based on
N/A
Life
assets supporting policy
income prospects
min.; can
investment
held in separate account;
with investment
increase based
performance;
choice of investment assets;
acumen.
on investment
not guaranteed.
death benefits depend on
performance.
investment results.
Adjustable
May select death benefit
Young families
Adjustable.
Adjustable at
Varies depending
Yes.
Life
and, within limits, choose
starting insurance
option of
on premium/death
premiums; face amount
program; need for
policyowner.
benefit mix; fixed
and premiums are fixed
flexibility with
with min.
between adjustment periods;
guarantees.
guaranteed interest;
usual features of whole life.
excess through
dividends.
Universal
Flexible premium current-
Middle and upper
Adjustable;
Flexible at
Varies depending
Yes.
Life
assumption adjustable
income looking
Option A like
option of
on face amount and
death benefit policy; policy
for ultimate in
Ord. Life;
policyowner.
premium; min.
elements unbundled; two
flexibility.
Option B like
guaranteed interest
death benefit options.
Ord. Life plus
excess interest
term rider
increases cash value.
equal to cash
value.
Universal
Combines features of
Middle and
Adjustable.
Flexible at
Varies depending
N/A
Life III —
universal and variable
upper income
option of
on face amount,
Universal
life.
with investment
policyowner.
premium, and
Variable Life
acumen looking
investment
for ultimate in
performance;
flexibility.
not guaranteed.
Annuities
Combine tax advantages,
Middle and upper
Accumulation
Fixed or
Varies depending
Yes.
investment choice,
income; qualified
period: max.
flexible.
on investment
flexibility and guarantees
(IRA) and non-
of premiums
performance; min.
with various lifetime payout
qualified retirement
or cash value;
guaranteed interest
options that cannot be
arrangements.
payout period;
rate unless variable
outlived.
depends on
annuity.
option.
14

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