I feel like I’m in a movie, a thriller called Universal Life Exposed. Rather than getting the movie right and then releasing it, each time a viewer doesn’t get the plot, we re-shoot the movie. So, Universal Life Exposed, scene 1, take 437,126……….roll it.

I read an article by a colleague, David Frucella, on his website. He summed up his feelings about universal life with this, “Universal Life is the most confusing product ever introduced by the insurance industry.” I understand why he said that, but I disagree. I would rephrase that to say that “universal life has the most potential to be misrepresented, and intentionally presented in a confusing manner than any other product ever introduced by the insurance industry”.

There is actually nothing confusing about universal life as long as you have an agent who is willing to present and discuss the guarantees, and only the guarantees, until you have made a decision. If the only thing on the table for discussion are the guarantees in a universal life policy, it is as simple and uncomplicated as a term insurance policy, maybe even more so.

With term insurance there is a table of guaranteed values. It sets out the maximum premium that the insurance company can charge for the term you selected. In the following attachment on page 4 is an actual table from a term policy. It’s a 20 year term and shows a guaranteed level premium for 20 years. The reason I suggest that term can be more confusing than universal life is that you have to get over what happens in the year after the guarantee ends.


In a universal life policy there is a comparable table of guaranteed values. The potential for abuse and confusion lies in the fact that on the same page will be a table of assumed values. Probably an appropriate time to say, “remember what they say about assuming”. If your agent doesn’t lead you to the assumptions and if you decide right here and now that what you want is guaranteed level premiums and death benefits, just stick to the left side of the illustration and you will see a table that shows nothing but guarantees. The following attachment is a good example. Remember, stay in the guaranteed column.


Now, here is where the confusion can come in that Mr Frucella alludes to. This confusion will only show up if you are dealing with an unscrupulous agent. The next attachment shows a universal life policy that is a piece of junk unless you believe the agent and decide that assuming things about the future is a prudent way to protect your family. This time, note that the guaranteed side goes belly up in short order, but that the assumed side of the policy seems to be a good deal.


Bottom line. Universal life is not confusing unless an unscrupulous agent sets out to confuse you. Go into your search for life insurance with the thought that you want to “guarantee” your family’s future. Write the word guarantee on your hand. Let the agent know up front that everything he or she presents to you has to be guaranteed. Make the agent show you the guarantees. Don’t buy it unless you are 100% convinced that what you are paying for is guaranteed. Don’t let assumptions play into your decision to buy.