TITLE
"The Nature and Causes of Variation in Insurance Policy Yields:
Whole Life and Universal Life," Journal of Insurance Issues, James
M. Carson and Mark D. Forster. Spring 2000, Vol. XXIII, No. 1,
pp. 30-47. Entire article in
Acrobat format.
ABSTRACT
This study examines policy (Linton) yields of two popular forms of cash-value
life insurance (whole life and universal life) for the period 1988 to 1998.
Several hypotheses and statements by professionals suggest that WL likely would
dominate UL in terms of policy yield. However, results indicate that universal
life policy yields were significantly higher than whole life policy yields for
five-year and ten-year holding periods. In addition, the variation in policy
yields is greater than that found in previous research. The analysis provides
information on the nature, extent, and causes of variation in policy
performance, both within and across policy type. The study's findings are
relevant to consumers, financial service professionals, insurers, and
regulators. [Keywords: life insurance, policy yield, options package, whole
life, universal life]
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