Versatile Life ® - How the policy works

Versatile Life can be likened to any whole life policy. It is designed to endow (the cash value equal to the face amount) at a given age which in most cases will be age 120. As such it can be compared to the classic description of a whole life policy consisting of a decreased risk part and an increasing cash part totaling to the face amount. This arrangement permits level premiums.

As a means of understanding Versatile Life, the cash accumulation is called the Insurance Fund and the risk portion is called the Insurance Benefit. Each year as the premium is paid, the premium flows into the Insurance Fund. The policy fee and the annual cost of the Insurance Benefit (determined by the Table of Annual Cost of Insurance Benefits or current table, whichever is used) are deducted from the Insurance Fund. The balance of money in the Insurance Fund is accumulated at the current interest rate. The sum of the Insurance Fund and the Insurance Benefit always equal the Face Amount.

It is possible to design several different configurations. For example, if more money is deposited into the Insurance Fund, there is a point after which the policy interest earnings will pay the Insurance Benefits, require no more premium payments and endow at age 120. The funds could be put into the policy as premiums over a period of time or as a single premium. The limited pay plans use this principle.

In a clearly defined plan such as Versatile Life Tri Guard (VL-TG), the insurance amount varies or is modified over a 21 year period. For example, the face amount is level for ten years (or age 55 whichever comes first) then decreases to 2/3 of the initial amount for 10 years then decreases to 1/3 of the initial amount (called the ultimate amount) for the rest of the insured's life.

The premium schedules under the policy are set at issue depending on the plan type. The owner cannot vary premiums at will (the major difference between Versatile Life and adjustable premium universal life) although he can make policy changes within a 60 day period of the policy anniversary date using the Policy Service Department. Illustrations of proposed insured policy changes are available at any time. A change in interest rate assumptions may necessitate a policy change at the anniversary date by the Company.