Variable Life Insurance Product Design: Comment

Abstract

The three main types of variable life insurance benefit designs have markedly different characteristics. Basically these differences stem from the manner in which investment experience is translated into changes in the death benefit. As Mr. Miller pointed out, favorable investment performance will produce larger face amounts under the New York Life design than those under the fixed premium Walker design for a substantial number of years. However, under these circumstances, the reserves under the Walker design will always be larger than for the New York Life design. This advantage is relatively minor in the early policy years but it grows to a substantial amount in the later years.