Universal life separates a stated death benefit from flexible premium timing and policy deductions. Indexed life uses an index-linked formula to set credits inside the insurance contract. This unit focuses on how those features work together, why flexibility is conditional, and why an index reference is not direct ownership of market investments.
Learning path
- Universal and Indexed Life: Flexible premiums, policy charges, cash-value performance, policy adjustments, and lapse risk in universal and interest-sensitive designs.
- Indexed Crediting and Flexible Funding: Index-crediting formulas, caps, participation rates, spreads, floors, premium funding, and the effect of policy charges.
Apply the unit
A client plans to pay the minimum illustrated premium and assumes an index gain will keep the policy in force.
- Identify the assumptions to review: actual deductions, crediting limits, premium history, guarantees, and the effects of lower-than-illustrated performance.
Study checkpoint
- Can you distinguish flexible premium from guaranteed premium?
- Can you explain why the policyowner does not own the index?
- Can you describe how a crediting floor and monthly charges can affect policy value differently?