Abstract
It is probably true that the average prospective purchaser of a universal life (UL) policy places considerable weight on the current rate of interest being credited to the policy's cash value. Certainly, it is true that current interest rates of UL policies figure prominently in virtually all UL policy advertisements. Far less emphasis is placed on the level of the mortality and surrender charges and on the expense component. It is, of course, possible that a relatively high current interest rate could be more than offset by relatively high expense, mortality and surrender charges. To the extent that this were true, the prospective purchaser who relied on the interest rate as an indicator of value could be misled. The purpose of this article is to examine the reliability of current interest rates as a guide to low-cost UL policies.
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