Assignment: Chapter Chapter 08-Insuring Your Life Due on Tomorrow at 11:59 PM EDT 5. Understanding universal life insurance Universal life insurance combines elements from term and whole life insurance. Term policies provide a death benefit component, and universal policies provide a death benefit how universal premiums are allocated, consider the following example. savings component, whole life policies provide a death benefit savings savings component. To understand Nathan is a 40-year-old lawyer who has taken out a universal life insurance policy to protect his two children (ages 11 and 10) in the event of his death. Each year, Nathan chooses how much he would like to contribute to the policy, as shown by the first row of the table below. The insurance company subtracts from this an administrative fee along with the cost of the death benefit (the into the cash value (or rate of return. Based on the given information, calculate the amount that is added to the cash value portion of the policy in each of the first three years. portion of the policy) then puts the remainder ) portion of the policy. This money earns interest at a Year 1 Year 2 Year 3 Premium (annual contribution) Administrative fee Cost of death benefit Amount added to cash value $2,769 $80 $130 $2,015 $80 $130 $1,749 $80 $130 The cost of the death benefit portion of universal policies is only fixed for certain case with risen substantially. At the same time, he is paying college tuition and currently cannot afford to pay his life i periods and rises with age, as is the life insurance policies. Suppose that in the 11th year of his policy, his cost of death benefit has premium. True or False: Under the terms of a standard universal policy, if Nathan stops paying his premiums, then his policy will be put on hold until he resumes payment (and pays back all missed premium payments) O False O True Type here to search