Universal Life Insurance: A Primer.

The article provides an overview of universal life, an alternative product derived from traditional life insurance in the United States. It traces the evolution of universal life. Then, it cites the provisions of universal life insurance policies such as the death benefit always exceeds the reserve from the policy's inception through its maturity and the minimum guaranteed cash values and reserves are based on the Commissioner's 1958 Standard Ordinary Mortality Table. The mechanics of the operation of universal life include flexible premiums; adjustable death benefit and excess interest and lower than guaranteed mortality charges. Finally, it addresses several issues confronting the insurer, the agent and the policy holder of universal life. These issues include how universal life will be treated under the federal income tax law; the need for sophisticated, expensive data processing support systems; lower agents' commissions and the replacement of existing policies.