UL payment solves

When using the payment solves with universal life illustrations, there are many factors that can affect the results. The behaviour of the solve can vary dramatically by changing things like the interest rate, payment duration and adding or removing optional benefits such as Term insurance. The chart below describes the basis for each of the Payment solves as well as some considerations for each type of solve.

Solve

Description

Availability

Considerations

Level minimum payment

The level minimum payment needed to keep the illustrated policy inforce to age 100.

The main rule for this solve is to keep the policy inforce.

Service account may be used.

Cannot be combined with other solves.

Can select this option in combination with other payment layers with Specified payments.

If other specified payments are enough to avoid lapse, the solved payment layer will be $0.

The level minimum payment may be higher than the level maximum, especially with short payment durations or yearly increasing cost of insurance because the level minimum solve doesn’t allow lapsing.

Level maximum payment

The level maximum payment permitted without using the service account.

The main rule for this solve is to avoid Service account during the duration of the solve.

Can select this solve in combination with Maximum withdrawal or Maximum loan solve as long as the two solve durations don’t overlap.

Can select this option in combination with other payment layers with Specified payments.

With this solve the policy may lapse because the overriding criteria is to not use Service account.

If there is a large 1st year payment with application then the level maximum solve may be $0 due to service account used in year 1.

If other Specified payments before the solve result in a service account balance, the level maximum result may be $0 due to Service account.

For limited pay cost types (10 Pay, 15 Pay and 20 Pay), the solve works best if the payments end before the costs end.

If Level maximum payment results in a lapse and you want to avoid lapse, change the solve to Level minimum payment or extend the payment duration.

Target death benefit

The level payment required to reach a specified death benefit at a specified year.

Service account may be used.

Can select this option in combination with Maximum withdrawal or Maximum loan solve as long as the two solve durations don’t overlap.

Cannot select this option in combination with other Specified or solved payment layers.

This solve works best when the death benefit option is Insurance amount + fund. There may be no solution if the death benefit option selected is Level, especially if the exempt maintenance type is Retain.

With this solve, the system will avoid lapse before the target year. If the payments need to be increased to avoid lapse, the death benefit may exceed the target.

Target cash value

The level payment required to reach a specified cash value at a specified year.

Service account may be used.

Can select this option in combination with Maximum withdrawal or Maximum loan solve as long as the two solve durations don’t overlap.

Cannot select this option in combination with other Specified or solved payment layers.

With this solve, the system will avoid lapse before the target year. If the payments need to be increased to avoid lapse, the cash value may exceed the target.

Duration solve

The minimum number of years the specified payment must be made to keep the policy inforce. The level payment required to reach a specified cash value at a specified year.

The main rule for this solve is to keep the policy inforce.

Service account may be used.

Cannot be combined with other solves.

Cannot select this option in combination with other Specified payment layers.