Which mortality costing option is typically more affordable in the early years of a Universal Life policy?

The option for Yearly Renewable Term (YRT) is typically more affordable in the early years of a Universal Life policy because it is structured to provide insurance coverage at lower costs initially. YRT insurance charges a premium that increases each year as the insured ages, but in the early years, these premiums are lower compared to fixed or level options because they are based on the current mortality rate, which is favorable for younger individuals.

This cost structure works well for policyholders who are looking for affordability in the short term, especially if they anticipate having coverage needs that may change later on. The YRT approach allows individuals to pay less initially while still obtaining the necessary coverage, making it an appealing option when first establishing a Universal Life policy.

Other options, such as Level Cost of Insurance (LCOI), provide a fixed premium that remains the same throughout the life of the policy, which can result in higher early costs. Fixed term insurance typically has predetermined pricing that might not be as flexible as YRT. Annual Renewable Whole Life options may also carry costs that are not as competitive in the initial years when compared to YRT.

Overall, the affordability of YRT in the early years is a primary reason many policyholders choose this option when starting their Universal Life