The current year paying the minimum premium will make

the current year. Paying the minimum premium will make the policy perform as
an annually renewable term product.
The target premium target premium is a recommended amount that should be paid on a
policy in order to cover the cost of insurance protection and to keep the policy
in force throughout its lifetime.
A universal life policy has two components: an insurance component insurance component and a cash cash
account account . The insurance component of a universal life policy is always annually annually
renewable term insurance renewable term insurance .

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Universal life policies allow the partial partial withdrawal withdrawal (partial surrender surrender ) of the policy
cash value. However, there may be a charge for each withdrawal and there are
usually limits as to how much and how often a withdrawal may be made. During the
withdrawal, the interest earned on the withdrawn cash value may be subject to
taxation, depending upon the plan. The death benefit will be reduced by the amount
of any partial surrender. Note, however, that a partial surrender from a universal life
policy is not the same as a policy loan.
Universal life offers one of two death benefit options to the policyowner. Option A Option A
is the level death benefit option, and Option B Option B is the increasing death benefit
option.
(

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Under Option A (Level Option A (Level Death Benefit Death Benefit option) option) , the death benefit remains level
while the cash value gradually increases, thereby lowering the pure insurance with
the insurer in the later years. Notice that the pure insurance is actually decreasing
as time passes, lowering the expenses, and allowing for greater cash value in the
older years. The reason that the illustration shows an increase in the death benefit
at a later point in time is so that the policy will comply with the "statutory definition
of life insurance" that was established by the IRS and applies to all life insurance
contracts issued after December 31, 1984. According to this definition, there must
be a specified "corridor" or gap maintained between the cash value and the death
benefit in a life insurance policy. The percentages that apply to the corridor are
established in a table published by the IRS and vary as to the age of the insured and
the amount of coverage. If this corridor is not maintained, the policy is no longer
defined as life insurance for tax purposes and consequently loses most of the tax
advantages that have been associated with life insurance.
Under Option B (Increasing Option B (Increasing Death Benefit Death Benefit option) option) , the death benefit includes
the annual increase in cash value so that the death benefit gradually increases each
year by the amount that the cash value increases. At any point in time, the total
death benefit will always be equal to the face amount of the policy plus the current