Policy Earnings
 Returning users may click here to go directly to the Policy Pricing Calculator (PPC)
All permanent life insurance policies are credited with interest and/or investment earnings after COI charges and expenses (Es) have been deducted. While life insurance policy projections can use a wide range of interest and investment earnings assumptions in calculating hypothetical policy values, actual policy performance will ultimately be a function of the actual performance of invested assets underlying policy cash values. As such, the Policy Pricing Calculator will produce the most accurate results when the selected assumed policy earnings rate is based on actual historical investment performance for the asset classes appropriate to the product type, investment temperament of the policyowner, policy holding period, etc., as described below.
Universal Life & Whole Life Policies
Universal Life (UL) and Whole Life (WL) policies are credited with a declared interest rate, much like Certificates of Deposit (CDs) offered by banks. UL products fully disclose this net interest amount credited to policy cash values, net of deductions for investment expenses and management fees. On the other hand, WL products include this interest inside the policy "dividend", and do not disclose the amount of interest, and neither UL nor WL policies disclose investment expenses and management fees. Assets underlying both UL and WL cash values are also required by regulation to be invested in high-grade corporate bonds and government-backed mortgages, the historical rate of return for which has averaged almost 6.0% over the long-term (Source: http://www.ibbotson.com/). As such, the Policy Pricing Calculator will produce the most reasonable approximation for UL and WL premiums and costs when using an Average Net Rate of Return most closely correlates with the historical return for the asset classes into which cash values are required to be invested (i.e., 6.0% +/-). On the other hand, to compare the pricing of a particular policy to TIA Benchmark premiums and costs, use an Average Net Rate of Return equal to that of the policy you are comparing.
Variable Life & Variable Universal Life Policies
On the other hand, variable life and variable universal life policies earn a rate of return that is directly related to the performance of invested assets underlying policy cash values (instead of the declared rate in UL and WL policies that is indirectly based over time on the performance invested assets underlying policy cash values) and are required to fully disclose all policy expenses, including investment expenses and management fees. Variable policy cash values can also be directed into a family of mutual-fund-like "separate accounts", typically including an assortment of domestic and foreign stock funds, an array of domestic and foreign bond funds, a money market account, and usually a fixed account (i.e., similar to an account into which UL and WL policy cash values are invested).
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