It includes an expanded explanation of these major policy types
By 1988, the sheer number of life insurance companies in the United States peaked at 2,343, with just 118 mutual insurance companies and 2,225 stock insurance companies.As a general rule, older (100 years or more) and larger insurers tend to be mutual; newer companies tend to be stock. The two primary forms of business organizations selling life insurance are stock companies (owned privately or publicly by individuals or institutions) and mutual companies (owned beneficially by their policyholders). Later known as Covenant Life Insurance Company, it is the oldest life insurance company in continued existence (now absorbed into Nationwide Financial) in the world. The life insurance industry got its start in the United States with the formation in 1759 of the "Corporation for Relief of Poor and Distressed Presbyterian Ministers and of the Poor and Distressed Widows and Children of Presbyterian Ministers." And not only are such policies available to insure an individual, but they can also cover two or more qualified insureds.
Today's sophisticated choices include Universal Life, Variable Universal Life, Variable Whole Life, Secondary Guarantee Universal Life, Equity Indexed Life, and Adjustable Life. Technology and economic changes have allowed or encouraged the development of a much broader spectrum of policy types available to those who need life insurance. Our parents had a narrow choice of product offerings when it came to buying life insurance: term insurance for temporary needs and Whole Life for insurance needs that would persist as long as they lived. Thus, where insurance is classically defined as policy owners shifting intolerable financial risk from themselves to an insurance company in exchange for a tolerable and predictable premium, Universal Life has an unquantifiable amount of risk that is shifted back to the policy owner, who often has no understanding of the magnitude of the transfer or its cost.
What is not obvious about such policies is that it is entirely the policy owner's responsibility to make sure that the money paid into the policy (still referred to as a "premium") plus interest credited to the account value cumulatively exceeds the policy expenses and insurance charges. Universal Life policies (the term for "flexible premium") allow policy owners to pay pretty much any amount they choose into the policy - as often or as infrequently as they wish.
This groundbreaking departure meant, among other things, that there was no longer a fixed premium for which the insurance company guaranteed the sufficiency of the policy. Flexible premium policies were first sold in 1979 and introduced the concept of uncoupling the integrally entwined financial components of premium, cash value, and expense and insurance charges within a life insurance policy. A rapidly increasing number of older policies were surrendered on behalf of the new form of life insurance.