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An In-Depth Look At The Differences In Variable Life and Variable Universal Life Insurance Policies

When it comes to variable UL and Variable Life, they give death benefits and cash values that differ because it’s based on the performance of its underlying investment portfolio. But, when it comes to understanding of these policies, it’s not that easy.

UL policies earn their interest using the cash value bucket, as noted above. The company will use the premium monies sent and put it into the so-called “General Account”. In simple words: the company takes on the risk of investing and credits the enforced UL policies with interest based upon their investment results. However, no direct link is established between the declared UL policies’ interest rate and the life insurance company’s investment portfolio.

Now, there is a link between how much the company gets back on its investment and the interest applied to the UL policies, but it’s not a direct one. However, the Variable UL and Variable Life policies finance the cash value bucket in many investments the policy owner can choose from – known as investment subaccounts. There is a direct connection between how much is earned on the cash value bucket and the investment subaccounts.

For instance:

When the policy owner picks subaccounts that are attached to the stock market and there is a decline in the market, the policy may not be funded properly and extra monies will need to be paid for the policy to stay in force. When the stock market is doing well, earnings on that cash value bucket could surpass how much is needed for the UL cash value bucket.

Prospectus: What Is It and Why Is It So Important

Variable Life is found in both whole life and UL versions. Generally, there are numerous investment subaccounts that sort them from conservative to aggressive (or money-market or bond funds to growth-stock funds). By law, Variable UL and Variable Life have to be sold with a prospectus, which should be thoroughly read before the purchase of any one of the policies.

What is a prospectus? It’s a long document that can be a bit tedious to read. However, it needs to be done because extremely important information will affect the future performance of the policy. If you don’t want to deal with the prospectus, you need to find a professional to assist you in choosing the right policy based upon what your circumstances are.

No Guarantees With Variable Life and Variable UL Policies

Due to the direct correlation between the cash value bucket and investment subaccounts’ performance s, the Variable Life/Variable UL policy’s cash value isn’t guaranteed, meaning it’s the policy owner that bears the hazard. The policy owner has the ability to generate the best allocation of funds by picking among the fund options that are available. And, from this creation, they can get the best investment subaccounts that will meet their risk tolerance level and stated objectives.

High cash values come from the performance of good investments, which, in turn, leads to higher death benefits. But, performance of poor investments will decrease the amount of cash values and death benefits. There are some policies that stipulate death benefits will never drop below a certain amount.

What You’ll Be Presented With When Shopping For Life Insurance Policies

When looking at the Variable UL and Variable Life policies, you’ll be presented with both a proposal and the prospectus. Since the policy owner choses how the investment of the cash value bucket is made, there are more options than the UL policy. However, it also means that more things can work against the owner. Still, the owner has control over the cash value bucket.

Whole life, UL, Variable UL and Variable Life allow for policy loans. But, when taking loans out, it increases the chances of the policy prematurely lapsing. It can lead to negative tax penalties under some instances. Both the Variable UL and Variable Life policies may need to be yielded for its cash value with the policy owner given the choice to convert the policy for an annuity contract.

It’s important to remember that the purchase of a permanent life insurance for temporary means will only cost more in the long run. Term life insurance, on the other hand, is inexpensive. So, if this is what a policy owner needs, it’s best to look at term life insurance policies.

What You Should Consider Regarding The Variable Universal Life Policy

Some of things to consider with the Variable Universal Life, which can negate any tax advantages include:

• State and federal premium taxes differ among each state. However, the average is about three percent of premiums.
• Mortality and expense charges are evaluated against cash values that differ from 60 to 90 points.
• There is a 20 to 162 basis points difference in investment management assets charges.
• Surrender charges usually surpass the first year premium and lasts up to 15 years.

Before you distribute any future premium payments to investment subaccounts, be sure you look them over intensely. You want to be sure they are ideal for the risk tolerance of the policy owner. How balanced are they? Are there a number of investment choices that assumes the risk tolerances? There are all kinds of factors that can negatively affect a Variable UL or Variable Life policy’s well-being and performance. It’s important you understand this before moving forward.

What Factors Should You Consider When Picking A Life Insurance Company For A Policy

The marketplace is full of original products and, because of that, you need to make sure that you compare items similar to each other when it comes to shopping for policies. The task of reviewing the different types of permanent coverage can become awfully tedious. And, because of the complexity of today’s life policies, it’s important to have computerized sales illustrations to help with the confusion.

When it comes to the pricing of life insurance, it’s done two ways:

• Retrospectively – reviewing previous experience and making adjustments to the premium rate and other issues.
• Prospectively – making guesses on what the future variables are going to be.

There are a few primary factors that dictate the pricing of products, which are:

• Investment performance
• Mortality experience
• Expenses
• Policy lapse rates

What a product actually cost is determined by what the actual performance of the company is based on these four areas. And, the four factors come from an array of insurance industry resources like the A.M. The information can be found through the companies themselves or at public libraries. Bear in mind that the majority of life insurance companies have no desire in releasing details about their products when it comes to the parts of it.

Four General Parts That Drives A Life Insurance Policy’s Performance

The performance of a policy is dictated by four general parts:

• Administrative and overhead expenditures
• Earnings – dividends, interest rates, etc.
• Mortality – This cost is based on the amount the company will charge to give you the insurance – is there a risk for them and how much will they lose
• Persistency – The amount of policies that stay current

Bear in mind that interest rates change and can have a significant impact on a policy’s performance, more so than the other parts. Still, a minor change in the mortality rates can greatly impact its performance too… although this is rare.

Life Insurance Policy – What Kind Of Earnings Are Available

There are three kinds of earnings:

• Dividends
• Credited interest rates on conventional life insurance products

When it comes to equity-indexed universal life, there is a participation rate for a specific equity index for products. On products with variable life insurance, there are two kinds of accounts:

• Fixed accounts earn their interest at present rates.
• Variable accounts have a net gain or loss on their earnings from amounts that are invested in these accounts.

How You Can Purchase The Right Life Insurance Policy For You

When shopping for policies, how do you know what policy is right for you? Is it suitable for you? The complexity of the question will depend on if you have an advisor or are doing it alone. If you have an advisor, how much knowledge do they have about the subject, what state you reside in and how comfortable you are with the methods and resources you’re presented with? Basically, it’s based on individual basis.

When it comes to suitability and life insurance, there are no definite answers for anyone – professional advisors included.  The sale of variable insurance products falls under the realm of FINRA/SEC.  In looking at the suitability regulations from the look of life insurance instead of securities regulations, there are numerous differences.

Suitability regulations already in place for registered products are variations of any and/or all investment products’ regulations. Therefore, they’re not always valid to life insurance policies.  The rules of state suitability exist in a minute number of states and differ in terms of the following:

•    Enforcement
•    Requirements
•    Terms

The amount of life insurance sales that have non-registered products is low for life insurance. There about 30 states that have suitability rules for annuities, which mean suitability rules for life insurance may be in the near future.

There is one mantra echoed through the life insurance industry: it’s not bought, it’s sold. Carriers taught this mantra and passed it from one agent to another agent. Agents regarded life insurance as being a unique product – a one-size fits all miracle potion that cures you of whatever troubles you.

Life insurance isn’t considered to be a financial plan. And, for that reason, it should be given merit for being a strength of its own. The reason many life insurance policies write up policies in the U.S. is because the industry has a entrusted interest in pushing high profit, high-commission whole-life insurance policies.

It’s imperative to get into the past of how field representatives determined what a person’s life insurance needs were. Agents worked on behalf of the company they are employed with. However, as time went on, these life insurance companies looked to separate themselves from the agents and claim to have no responsibilities to the abuses agents have done.

Suitability demands that brokers and agents completely understand what it is they’re selling. If not, they are not going to be able to provide a sensible recommendation. Agents were constantly asked to give out products that were similar to “black boxes”, meaning they had no idea what it was they were selling.   Everything about it was a mystery:

•    Mortality costs
•    Overhead expenses
•    Dividend determination

The change began with universal life, but was furthered with the introduction of the Illustration Questionnaire by the American Society of CLUs and ChFCs. Until then though, carriers and agents did not have any knowledge about the life insurance contracts. Therefore, until the NAIC Life Insurance Model Regulation was introduced in 1995, agents and brokers could show anything they deemed worthwhile to “themselves”. If you have more questions about policy itself or any other related products and calculations, you can always refer to west life insurance advice channel and get a quality service and information.

West Coast Life Insurance Company

This San Francisco-based company was founded in 1906 in order to meet the needs of insurance for the west region, as the name indicates, just days before the great earthquake and fire. After the huge impact, they have quickly responded to residents of SF area by offering a reconstruction loan. Then later it became a subsidiary member of the Protective Life Insurance group. Since then, West Coast Life Insurance Company has been serving nationwide across America with innovative idea, quality products and superior customer service.

West Coast Life Company offers an array of life insurance products to meet various families’ income protection, wealth preservation and estate planning needs. Customers can have a choice of selecting a number of different annuity products with low fees and expanded investment options available.

Also as part of their innovative creation of new product, the company introduced product called asset protection by which customers can be relieved when their valuable assets are in good control and protected. This can include regular vehicle as well as other recreational or power sports ones.

Main Contact for West Coast Life Insurance:

343 Sansome St
San Francisco, CA 94104-1303
(415) 591-8200

Customer Service

The company is known for superior customer service ratings over the past decades, with prompt and accurate service with top priority of value in customers.

Life and health insurance customers:
PO Box 12687
Birmingham, AL 35202-6687
1-800-866-9933 or email ladphs@protective.com

Variable life insurance customers:
PO Box 1928
Birmingham, AL 35282-8238
1-800-265-1545 or email vulservice@protective.com

Annuity customers serviced at:
PO Box 1928
Birmingham, AL 35282-8238
1-800-456-6330 or email annuityservice@protective.com

Annuity customers serviced at:
1707 N Randall Rd, Ste 310
Elgin, IL 60123
1-800-621-5001 or email acctransactionteam@protective.com

West Coast Life insurance customers:
P O Box 12687
Birmingham, AL 35202-6687
1-800-866-9933

Why you should buy West Life Insurance

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You would want to achieve greater financial security and peace of mind by strong insurance product through right company. West Life Insurance can layout overall financial plan, ranging from individual life policy to group or company policy with detailed, customized options to meet each individual’s specific payment and maintenance needs and requirements.