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Deconstructing a Policy

The following illustration is based on a $1 million variable universal life insurance policy for a 35-year-old male nonsmoker. It assumes annual premiums of $9,540 for 10 years and annual investment gains of 10%. 




   YEAR    PREMIUMS    ACCOUNT   VALUE OF CASHED-  ANNUAL RETURN

           PAID        VALUE*    IN POLICY**       ON INVESTMENT

		   

   1        $9,540      $7,961      $2,385           -73.2%

   5        47,700      47,963      41,298            -2.2

   10       95,400      119,354     114,129            4.9

   15       95,400      165,526     165,526            6.6

   20       95,400      231,793     231,793            7.0
*After fees, plus 10% investment gain

**After surrender charge, which starts at $5,576 in Year 1 and decreases every year until it disappears in Year 15

DATA: EQUITABLE LIFE, CONSUMER FEDERATION OF AMERICA


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Updated Apr. 2, 1998 by bwwebmaster
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