Jay Khatter
New Member
- 7
Does any one know as a percentage how much of the clients monthly premium goes towards the cash value or separate account? Or is every company going to be different?
Cash Value Separate Account Whole Life Insurance Question
- Thread starter Jay Khatter
- Start date
Every company is different and it will vary according the cost of insurance due to sex, age, age of the policy, etc. There is no way to set a fixed percentage for the life of a policy..
- 5,497
Not only will every company be different, but it will differ from policy to policy within the same company depending upon how the policy is structured (unless you are talking about a simplified issue product).
A policy designed for maximum cash value:premium will accumulate cash value much more slowly than a policy with the same premium where the death benefit has been purposefully kept as low as allowed by the Internal Revenue code to be relative that given premium amount and still maintain the characteristics required to be considered a life insurance contract.
- 11,277
Ever heard of amortization for loans? It's the same principle.
Whole life has a maturing date (when cash values = death benefits) - either age 121, 100, or a limited pay policy. (I'm primarily talking about a minimum-premium situation depending on the maturing date. You CAN put in more value via PUA riders, etc.)
The company takes the amount needed to "fill the box" with the current interest rate environment and "front-loads" the costs - just like amortizing a car loan or mortgage.
Whole life has a maturing date (when cash values = death benefits) - either age 121, 100, or a limited pay policy. (I'm primarily talking about a minimum-premium situation depending on the maturing date. You CAN put in more value via PUA riders, etc.)
The company takes the amount needed to "fill the box" with the current interest rate environment and "front-loads" the costs - just like amortizing a car loan or mortgage.
- 2,263
also depends a lot on the age of the policy. As the cost of insurance increases, more of the premium is going to the cost of the insurance and less to the cash value build-up
- 4,132
are you actually asking about universal life instead of whole life?
