Universal life insurance combines elements from term life insurance and whole life insurance. Term policies provide a death benefit savings component, whole life policies provide a death benefit savings component, and universal policies provide a death benefit savings component. To understand how universal premiums are allocated, consider the following example. * Andrew is a 43-year-old lawyer who has taken out a universal life insurance policy to protect his two children (ages 14 and 17) in the event of death, Each year, Andrew chooses how much would like to contribute to the policy, as shown by the first row of the table below. The insurance company subtracts from this an administrative fee along with the cost of the death benefit (the portion of the policy) then puts the remainder into the cash value (or portion of the policy. This money earns Interest at a rate of return Based on the given information, calculate the amount that is added to the cash value portion of the policy in each of the first three years. Year 2 Year 3 Year 1 $2,985 $90 $2,158 D $1,714 $90 $90 Premium (annual contribution) Administrative fee Cost of death benefit $130 $130 $130 Amount added to cash value $ $ The cost of the death benefit portion of universal policies is only fixed for certain periods and rises with age, as is the case with life insurance policies. Suppose that in the 8th year of his policy, his cost of death benefit has risen substantially. At the same time, he is paying to have major repairs done on his home and currently cannot afford to pay his life insurance premium Year 1 Year 2 Year 3 $2,985 $2,158 $1,714 Premium (annual contribution) Administrative fee Cost of death benefit $90 $90 $90 $130 $130 $130 Amount added to cash value $ $ $ The cost of the death benefit portion of universal policies is only fixed for certain periods and rises with age, as is the case with life Insurance policies. Suppose that in the 8th year of his policy, his cost of death benefit has risen substantially. At the same time, he is paying to have major repairs done on his home and currently cannot afford to pay his life insurance premium. True or False: Under the terms of a standard universal policy, if Andrew stops paying his premiums, then his policy will be cancelled and the value of the cash portion will be paid out to him immediately, True False