The Visible Policy
Page 8, State This!

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Current Statement for My Policy

Here is my latest statement, issued at the end of the tenth policy year.
The previous page described the four policy "machines".
Can you discern a relationship between the machines and this statement?

Unofficial Reproduction of Annual Statement

The Company You Keep
New York Life Insurance Company 
Annual Policy Summary 
Policy Number:  ## ### ### 
Page 3 of  3 

Date Prepared: May 10, 2010

Life Insurance Death Benefit
as of May 10, 2010

Policy Cash Value
as of May 10, 2010

Base Plan Death Benefit $100,000.00

Base Plan Guaranteed Cash Value
Death Benefit of Optional Paid up Life
  Insurance Rider (OPP)
Cash Value of Optional Paid up Life
  Insurance Rider (OPP)
Death Benefit of Paid up Additional
  Life Insurance purchased by Dividends
Cash Value of Paid up Additional Life
  Insurance purchased by Dividends
Premiums paid beyond May 10, 2010
Premiums paid beyond May 10, 2010





Loan Summary
from May 12, 2009  to May 10, 2010

Dividend Summary
as of May 10, 2010

No activity during the period

The 2010 DIVIDEND credited
  to your policy
    The dividend of $890.27 purchased
      $2,009 of increased Death
      Benefit Paid up Additional
      Life Insurance


Summary of Our Disbursements
from May 12, 2009  to May 10, 2010

Summary of Your Payments
from May 12, 2009  to May 10, 2010

No activity during the period

Policy Premium

Payment(s) for Optional Paid up
  Insurance Rider (OPP) Premium



100% Unapproved --   No content within The Visible Policy is authorized or verified by NYL   -- 100% Unapproved

Annual Statements:   1   2   3   4   5   6   7   8   9  10
11  12  13  14 

Premium, Dividend, and OPP Notes

Each statement represents a single instant of time.  One second before midnight on each policy anniversary date, a computer generates a record representing the facts as they were then.  A dividend, if any, is credited, representing my ownership interest in NYLIC.  Guaranteed Cash Value is credited, in exact accordance with the terms of my policy.  Other updates are silently made, increasing cash value, also in accordance with the terms of the policy.  NYLIC seems to consider this money as too hard to explain; the computer credits it to your account without reporting why or where it came from.

Other kinds of updates vary from statement to statement.  Has next year's premium been paid yet?  If so, add this amount to both the Total Death Benefit and Net Cash Value.  (Should I die or cancel the policy two seconds past midnight, the whole premium would be refunded.  As the year progresses, more and more of the premium is devoured by the policy.)  Has PUA been purchased?  If so, update the lines relating to OPP.  If there had been loan or disbursement activity during the year, this would affect the statement in other ways.

Such variances and silences make comparing statements a somewhat complex process.  NYLIC has legal and accounting reasons to report the policy as it was during that one second in time.  Analytically, that instant has too many variances.  For The Visible Policy, I have chosen to eliminate the variances by representing the policy as it will be two seconds before midnight of the next policy year.  Premium payments will always have been made (and completely spent), OPP will have been purchased, and, in general, activity from year to year becomes easy to compare.

My hope is that these "Activity Statements" will help illuminate the policy machines.  Admittedly, they are a bit harder to understand than NYLIC's Policy Summaries.  I cram more information into less area.  Once you try to compare statements from year to year, I think you will find that the Activity Statements are in fact clearer.  The left and right links at the top of the table allow you to easily cycle between activity statements.  Those statements contain calculated values discussed earlier, such as earned dividend rate and black box annual gain.

<:=- Last       Activity, Current Year (13 to 14)       First -=:>
9 May 2010
in Value
to Date
Base Death Benefit 1,764

OPP Death Benefit 236
490 27,456
Dividend Death Benefit 890.27 2,009 19,573
Total Death Benefit 2,000
Guaranteed Cash Value
2,000 / 100,000 = 2.0%g

2,000.00 21,500.00
OPP Cash Value
357.76 / 27,456 = 1.30%g
Dividend Cash Value
246.09 / 17,564 = 1.40%g
Total Cash Value to Date $18,079.81 $25,289.76 $43,369.57
early payment of $2,000 carried forward to next activity summary

The top half of the Activity Statement tracks Death Benefit, just as does the first block of NYLIC's Policy Summary.  Similarly, the bottom half of my statement corresponds to the Cash Value block of NYLIC's statement.  I use colors to represent various kinds of values.

Red numbers are payments made out of my own pocket.
Green numbers are Death Benefit.
Black numbers are Cash Value.
Blue numbers are used to represent special quantities.
  • Since I choose to keep my dividends within the policy, they simultaneously act to increase cash value and to purchase more insurance.  Yet they are not an "out-of-pocket" expense.  (Perhaps in this context they are an example of a "not-into-pocket" gain.)
  • The blue cash value total can be thought of as either last year's EoY number, or this year's BoY number. I include it because it is useful for various calculations, and it is just nice to see the two EoY numbers back-to-back.

The black numbers in the "Payments" column purchase more insurance.  The black numbers in the "Increase in Value" column do not.

The latter numbers represent a special kind of earnings.  Both NYLIC's statement and mine specifically report Guaranteed Cash Value.  However, careful review of a single NYLIC statement would not reveal the other earnings.  To glean the existance of these pennies from heaven, you have to carefully compare two consecutive NYLIC statements.  I describe this gain as "linear increase in value"; see the PUA Cash Value section of the previous page.

Accesses since 20 June 2001
last modified 22 November 2010
2001 - 2010 by Rich Franzen

Rich's Home Page

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No content within The Visible Policy has been approved, authorized, or verified by New York Life or any of its representatives.  I have attempted to fairly and accurately portray the policy, but there are likely to be mistakes.  Over time, I shall endeavor to correct any misinformation found herein.
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