The traditional fixed-value whole-life insurance policy, like the traditional fixed-rate mortgage, soon may be replaced by a flexible product that makes the policyholder bear some of the risk, according to insurance industry experts.

At a news briefing last week, the Atlanta-based consultants and actuaries Tillinghast, Nelson and Warren Inc. predicted that the universal life policy, now marketed by about 25 companies, will be offered by about four times as many companies next year. It ultimately will supersede most traditional forms of life insurance except term insurance, which has no savings element, they indicated.

President James C. H. Anderson further predicted a reduction in the number of life insurance agents. The survivors will be forced to sell more policies at lower commissions. Also ahead, said Vice President Ardian Gill, is a wave of acquisitions and of new stock companies selling universal life that threaten to take away a share of the market from some of the older, established mutual insurance companies. These are saddled with the old-style policies permitting cash-out at book rather than market value.

Though the trend has abated somewhat, policyholders in record numbers have been borrowing against their policies at 5 percent to 8 percent interest and reinvesting the money elsewhere at 15 percent. As of the end of March outstanding policyholder loans amounted to a record $43.2 billion.This represents "the most lethal threat to the industry's survival," Anderson declared. Recently insurance companies have cut back on lending commitments to pension funds and contractors and have begun imposing floating rates on the loans they make.

The concept of whole-life insurance with its fixed premiums and benefits has not changed significantly since the beginning of this century. However, the ravages of inflation have made it increasingly obsolescent. In constant dollars, the net assets of the individual life insurance industry have decreased by 10 percent to 15 percent in the past decade.

Pension funds long ago overtook insurance companies as savings vehicles. Now money market mutual funds, which have gathered some $122 billion in assets in roughly two years, threaten to overtake the 200-year-old individual life insurance industry with $130 billion in assets (reserves minus loans).

Also tax laws conceived in an era of relatively stable interest rates have worked against the industry by making investment income subject to bracket creep. Though the IRS has recently ruled that interest accredited by Policyholders is deferred, it has not taken away the tax liability of companies. Taxation is currently a "hot" issue in the industry.

The insurance industry is regulated by the states, rather than the federal government, under the McCarran Act. Noting that some states can take up to five years to grant licences for new companies, Gill expressed the opinion that the only hope for reform in the near term was a gradual phasing out of McCarran. He said he thought large mutual companies might press for it, but they are sure to be opposed by the property-casualty insurance industry, which looks upon McCarran as its Magna Carta. "It's bound to be the damndest scrap you ever saw," Gill added.

Meanwhile, in Anderson's words, the industry's survival "as something more than a minor branch of the wider insurance business," depends upon its ability to modernize products and distribution systems. He believes that universal life is such a product.

It was introduced in early 1979 by E. F. Hutton Life Insurance Co. and affords complete flexibility to the buyer to change both the amount of coverage provided and the amount and timing of premium payments. Investment returns are competitive and tax deferred. Some policies even offer automatic indexation of death benefits to the cost of living.

In Gill's words "universal life is really a pool of money invested in money market funds. It just so happens that the insurance company guarantees the value of the funds. But, if I'm right about the next generation, you can see a universal life policy where the investments belonging to the policyholder go directly into a money market fund. The risk of the market value cash-out is the policyholder's and so is the rate of return. You can take that a little farther and say that the policyholder can have a money market fund, an equity fund or some other kind. So the insurance industry may stop fighting money market funds and join them."