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What is Universal Life Insurance? | Jabar Post Indonesia
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder). Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses, such as funeral expenses, can also be included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.
Modern life insurance bears some similarity to the asset management industry and life insurers have diversified their products into retirement products such as annuities.
Life-based contracts tend to fall into two major categories:
Protection policies: designed to provide a benefit, typically a lump sum payment, in the event of a specified occurrence. A common form—more common in years past—of a protection policy design is term insurance.
Investment policies: the main objective of these policies is to facilitate the growth of capital by regular or single premiums. Common forms (in the U.S.) are whole life, universal life, and variable life policies.
Universal life insurance is a form of permanent life insurance, offering the low-cost protection of term life insurance along with a savings element. It allows you to use the interest from your accumulated savings to pay premiums. Premiums are variable and broken down by insurance companies into insurance and savings elements, allowing you to adjust the mix, depending on your circumstances. That means that the death benefit, savings element, and premiums can all be altered if needed. And, unlike whole life insurance, Universal Life Insurance allows the cash values of investments to grow at a variable rate that is adjusted monthly.
If you’re looking for permanent life insurance with more investing flexibility, Universal Life Insurance may be right for you.
For more information about Universal Life Insurance, contact us today.
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