There are two reasons why your death benefit may not have increased this past year:

1. Recently issued policies must typically be in force for several years before the policy's cash value reaches the point at which the death benefit begins to increase. 
   
   
2. Older policies that have experienced artificially high growth in the past may have been converted to a more conservative basis for cash value, temporarily causing the death benefit to stop increasing.  Death benefit increases will resume when the cash value growth is sufficient to support an increase in the death benefit again. 

Three factors affect cash value increases:

1. Premiums:  All premium payments are added to the previous month's cash value.
   
   
2. Expenses:  Deductions for administrative costs, acquisitions costs, service costs and mortality costs are made.
   
   
3. Cash Value:  After premium, if any, is added and expenses are deducted, the balance of the cash value is credited with the monthly equivalent of the current annual crediting rate to create a new cash value amount.

Your Value-Added Whole Life policy is guaranteed to earn a minimum interest rate of 4.5% and the initial death benefit is guaranteed for your life.  Your ANNUITYLife policy is guaranteed to earn a minimum interest rate of 4.5% and has a graded death benefit.  It will pay a minimum of 90% of the initial death benefit in year 1, 95% in year 2 and 100% in year 3 and thereafter.  Premiums for both policies are fixed and will never increase.  If you ever choose to surrender either policy you will receive the greater of:

1. Your total premiums paid less any outstanding indebtedness,
   
   or
   
   
2. Your current cash surrender value less any outstanding indebtedness

The guarantee of the return of total premiums paid is forfeited if the policy is converted to Reduced Paid Up or if a partial cash surrender has been made.  In either case the policy owner will receive the current cash surrender value less any outstanding indebtedness. 

Expenses are comprised of the following costs:

1. Administrative costs: The policy’s share of overhead costs (building rent, electric, heat, etc)  Administrative costs are incurred for the life of the policy.  These costs may change but may never be so high as to lower the death benefit or the cash value below the guaranteed values. 
   
   
2. Acquisition costs:  The policy’s share of costs for marketing, underwriting, medical exams and labor.  These costs are amortized and returned to the cash value of the policy over a 10 year period. These costs may change but may never be so high as to lower the death benefit or the cash value below the guaranteed values. 
   
   
3. Service Costs:  There are two types of service charges.  There is a charge for Living Services for “Grandfathered” (GF) Members and a monthly charge for Survivor Assistance Services for all members.  A more detailed explanation of Living and Survivor Assistance Services can be found on our website at www.aafmaa.com. 
   
   
4. Mortality costs:  The charge from the premiums paid and/or cash value of the policy to pay for the current year’s cost to insure you.  These costs are incurred for the life of the policy and may change but may never be so high as to lower the death benefit or the cash value below the guaranteed values. 
   
   
5. Opt-out credit:  The offset to charges for Living Services for those GF who have opted out of providing our contractor their non-public personal information in accordance with AAFMAA’s Privacy Policy.  The monthly credit is effective the month after opting-out. 
   

No, as long as you keep your policy in force.  However, if the policy is surrendered, partially surrendered, annuitized or lapses due to becoming over loaned, any cash value in excess of the premiums paid is taxable and reported to the IRS.  For example, if $3,000 in premiums has been paid and the current cash surrender value is $8,000, including any outstanding loan, AAFMAA will report $5,000 as taxable income to the IRS on a Form 1099R (excess earnings over premiums paid).

Death benefit growth is dependent upon cash value growth but it will not be dollar for dollar.  At the end of the each month your policy’s new cash value is determined.  This amount is used to determined any death benefit increase on your policy. The death benefit will be the larger of the initial face amount, the prior months’ death benefit or a higher death benefit.  The process is known as the Cash Value Accumulation test under Section 7702 of the Internal Revenue Code.

Mortality costs are based upon two variables.

1. Your attained age.  In almost all instances your mortality costs increase on the anniversary of your policy following an age change. The older you get the more money the Association needs to cover the actual cost of your insurance. 
   
   
2. AAFMAA’s investment and mortality experience.   Good investment experience and mortality experience can cause mortality expenses to reduce.  Conversely, bad experience can cause them to increase.  Such adjustments are recommended by the Actuary and usually occur only once a year but can occur more often if warranted.
   

None of the internal costs of a policy, be they administrative charges, mortality charges or service charges can increase to a level to negate the guaranteed cash value or guaranteed death benefit of a policy.  A Value Added Whole Life policy’s guaranteed cash values and death benefits, for selective years, can be found on the Face Page attached to your Certificate of Insurance.

You may access your cash value in two ways:

1. You may borrow up to 75% of your cash value less any current indebtedness.  The variable loan interest rate is always 1% above AAFMAA's current crediting rate.  For example, if the crediting rate is 7.2%, the variable loan interest rate is 8.2%.  The crediting rate is set each year.  The money you receive in loan amount is still credited with AAFMAA's current crediting rate, just as if it had never been borrowed.  Although there are no income tax consequences at the time the loan is taken (except for Modified Endowment Contracts) any interest due that is not paid will be added to the loan principal.  If the combined loan principal and accrued interest exceed the current cash value of the policy, the policy will lapse.  There may be income tax consequences and/or changes to membership status and benefits at the time of policy lapse.  If you would like a policy loan, you may contact our Policy Services Department at 1-800-522-5221.  You may also go to our website at www.aafmaa.com and choose Online Forms.  Print “Loan Request” form, complete, sign, date and mail it to us. 
   
   
2. You can surrender your policy.  If the amount of cash value surrendered exceeds the premiums paid, the gain will be reportable to the IRS as taxable income and you will receive an IRS form 1099.

You may access it by borrowing or cash surrender just like Value-Added Whole Life or additionally, you may elect a lifetime annuity payment to your age 100.  If you do not live to age 100 the present value of future payments is paid to your beneficiary.  If you live past age 100 annuity payments will still be paid.

If your Annual Statement shows a loan amount, this amount represents your outstanding loan plus any accrued interest as of the last day indicated in the "Statement Period".  There are two ways you can have a loan against your policy:

1. At some point you requested to borrow some or all of your cash value.  By taking a loan from the cash value of your policy, interest has been charged on the loan, currently at 1% above the crediting rate of the policy for a variable interest rate loan.  On fixed interest rate loans (not currently available) the interest rate charged remains unchanged.
   
    

2. If we have not received a premium payment when due on your policy, and your policy has enough cash value to pay the premium, an Automatic Premium Loan (APL) will have been taken from the cash value of the policy to pay the premium, so that the policy is kept in force and the insured remains covered.  The APL procedures are permitted in accordance with the AAFMAA Constitution and/or your policy terms.

Unpaid interest is added to the principal of the loan.  If the loan principal and interest exceed the current cash value of the policy, the policy will lapse.  If you have a loan, it makes good financial sense to pay the annual interest due each year.  To repay all or part of a policy loan, call Policy Services at 1-800-522-5221.