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For these policies, unless interest rates rapidly return to the levels of 25 years ago (an extremely scenario), it is possible that policy crediting rates will not increase above guaranteed minimums for many years to come. In fact, crediting rates would generally be lower but for the minimum rates guaranteed by the policy. Universal Life policies that were purchased 10 and 15 years ago were sold when crediting rates were substantially higher than they are today. This general expectation of the trend of portfolio interest rates in insurers' General Accounts will also have a large impact on in-force policies. Dividend scales and interest crediting rates are not likely to increase for another two to five years, and this could negatively affect the expectations of buyers of such interest-sensitive policies. But Whole Life and Universal Life policies are backed by the General Account of the issuing health insurance company, and these accounts are overwhelmingly invested in high-grade, fixed-return portfolios.

Universal Life policies fill an important style niche for policy owners who need more premium flexibility than allowed by Whole Life - but who are less aggressive than the style suggesting self-directed, investment-oriented policies. This brief lesson in portfolio economics is important to understand the likelihood that interest crediting rates on new Universal Life policies may well decline for the next few years, even as new-money interest rates increase in the economy. The reverse is also true: when new-money interest rates ultimately begin to increase from historic lows, there will be a negative lag effect on portfolios in which the average portfolio return will be lower than returns offered by new, fixed return investments. When interest rates are declining, the portfolio yield will be higher than new-money rates, and policy owners will enjoy the positive lag effect of the mathematics behind calculating portfolio yield. The company's portfolio yield would be an average of its total income - some at higher rates for older investments, some at lower rates for newer investments.