1 minute read
Annual Premium Flex Life General Description
ANNUAL PREMIUM FLEX LIFE can be described as a non-participating Whole Life certificate with adjustable cash values and a level guaranteed death benefit. Due to Federal guidelines, which mandate that a specified difference must exist between the death benefit and the cash value, the death benefit may be greater than the face amount in later years to qualify as life insurance under the guidelines.
ANNUAL PREMIUM FLEX LIFE is similar to a Universal Life certificate with respect to the calculation of the certificate cash value. The certificate cash value is determined by accumulating the premiums paid, less an annual service fee and current mortality charges, plus interest at a current rate. A surrender charge is applied during the first 19 certificate years. Each certificate has guaranteed certificate values which are used in calculating the minimum level of cash values.
Advertisement
The major difference between an Annual Premium Flex Life certificate and a Universal Life certificate is the premium payment provision. With Universal Life the certificate owner must determine the amount and frequency of payment. Annual Premium Flex Life has a fixed annual premium with a Premium Deduction Option that may be available after five certificate years.
Interest Sensitive - Accumulation Account
The Accumulation Account is an accumulation of premiums paid and interest credited, less insurance and expense charges. It equals: a. the Accumulation Account at the end of the prior month; plus b. any premium paid for that certificate month c. the risk premium for the month; plus d. one month’s interest on the balance of (a) (b) and (c).
The Accumulation Account earns interest at the interest rate declared by the Home Office. Interest credited to the Accumulation Account will not be less than 2.5% per year. That portion of the Accumulation Account equal to the mean outstanding loan balance during a year may earn interest at a lower rate.
The risk premium is the sum of: a. the cost of insurance coverage b. the extra premium for any special class rating c. the premium for any rider or supplemental rider attached to the certificate; and d. a monthly expense charge determined by the Hermann Sons Life Executive Officers but not to exceed $4.17 a month.
