In universal life insurance, the corridor represents the required difference between the policy ' s cash value and its total death benefit. In practical terms, it maintains a specified amount of net amount at risk between accumulated policy value and the death benefit payable by the insurer.

As cash value increases, the death benefit may need to increase as well so that the contract continues to satisfy the statutory relationship between cash value and death benefit required for treatment as life insurance. The applicable corridor percentage generally varies according to age and the tax-law framework under which the policy qualifies.

The corridor is therefore not related to conversion of group life insurance. Group conversion involves a limited period following termination of eligible group coverage during which an individual contract may be obtained. It is also unrelated to allocation of proceeds among multiple beneficiaries or to the reinstatement period available following lapse.

Universal life questions frequently test the distinction between cash value, death-benefit options, mortality charges, and the net amount at risk. The corridor specifically concerns the relationship between the first two.

Accordingly, the corridor is the gap between the policy ' s total death benefit and its cash value.

Study Guide Reference: Types of Life Insurance Policies — universal life; death benefit; cash value; corridor and net amount at risk.