• They are Term Life with a Savings or Investment account feature

• Old Policy Names - Whole, Ordinary, Paid-Up, Endowment Life

• New Policy Names - Universal, Flex, Deposit Term (Life)

• Stock Companies (non-participating) or Mutual Companies (participating)

Life insurance comes in many different forms. Policies that combine cash build-up value (savings) with death protection (term insurance) have a variety of names such as Whole, Paid-up, Endowment, Universal and others. Basically the policy has a death benefit payable to beneficiaries if insured dies during life of the policy (or) pays a cash surrender amount to insured if death does not occur.

A Cash Value policy is a Term policy with a Savings feature attached to it. Ordinary Life, also known as Whole Life, is a declining term policy to typically the age of 96 at which time the policy is said to endow or be worth in cash the face amount of the policy. At inception date the term insurance is equal to the face amount of the policy and begins decreasing in coverage as the savings increases correspondingly. The combination of Insurance and Savings is always equal to face amount of policy and if insured dies the face amount is paid to the beneficiary. Paid-up Life is a Ordinary Life policy with accelerated premium payments to end at a certain age such as Paid-up at 60. By pre-paying a higher premium than what would be charged for Ordinary Life, the death benefit is always equal to policy face amount yet one stops paying premium at an earlier age usually ending while still actively working.

Endowment Life is a further acceleration or pre-payment of Ordinary life and Paid-up Life premium payments. Besides shortening the time to pay premiums, an Endowment policy will endow at date of final premium payment. Example is a 20-year Endowment policy means one pays a premium for 20 years and at end of the 20th year cash surrender value will be guaranteed to be the amount of policy face value. Deposit Term, Universal Life and Flex Life (etc) all have Term Life with a savings feature. All offer an ability to pay more or less amounts into the savings portion by optional choice so long as you pay the minimum term Life premium to keep the policy in effect. Some do invest the savings portion and then share results earned over the guaranteed rate of return on cash values if they are able to earn more on the investments. This is similar (not the same) to a "Participating Policy" concept of a mutual insurance company whereas the policyholders participate in any net earnings of the firm when profitable through payment of dividends. Many UK and Europe-based insurance companies are investing into securities with the cash values thus taking more risk for policyholders for hopes of higher returns for them to share.

Most cash value policies are designed around the study of various countries tax laws. This helps create more effective marketing to those prospective customers having tax considerations being an important factor in a policy purchase. For Individuals, Families and Businesses financial planning strategies are very important. Life insurance, especially the right kind of life insurance, does often play a valuable part of the financial plan.

OMNI INSURANCE BROKERS
Centralized Liaison Office

5th Flr. Salustiana D. Ty Tower,
104 Paseo de Roxas,
Legaspi Village, Makati,
Philippines 1262
Tel: (632) 810-0487  
Fax: (632) 810-0761