universal life insurance

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Universal Life Insurance

A life insurance policy that combines features of term life and whole life insurance. That is, a person pays a premium and, in exchange, receives at least a guaranteed death benefit (as with term life insurance). Additionally, one has a cash value account that may be invested and may offer a higher return for the policyholder. A person may use the funds in the cash value account to pay premiums, increase the death benefit, or even serve as collateral for a loan. Premiums are higher for universal life policies than for other forms of life insurance.

universal life insurance

A combination of term life insurance and a tax-deferred savings plan paying a variable return. This combination was developed during the early 1980s when interest rates rose to very high levels and caused the public to view regular whole life policies unfavorably.

Universal life insurance.

Universal life insurance is a type of permanent insurance that offers flexible premiums and a flexible death benefit.

Your tax-deferred cash value account accumulates at least the guaranteed rate of interest, but may accumulate at a higher rate if market rates are higher than the guaranteed rate.

You can use the money in your cash value account to pay premiums if there's enough available. And you can also increase the amount of the death benefit without having to qualify for the additional protection. This alternative allows you to build inflation protection into your insurance.

As with other permanent policies, you may be able to borrow against your cash value account, though any outstanding loan reduces your death benefit. You also get a portion of the cash value back, minus fees and expenses, if you end the policy.

However, universal life is a more complex product than straight life and the premiums are higher for a comparable death benefit.

References in periodicals archive ?
Universal life insurance policies with long-term care riders may have accounted for 24% of premiums from new U.
Allianz Life Insurance Company of North America (Allianz Life) today announced the launch of accelerated underwriting and ApplyNOW, new technology available to help streamline the application process for Allianz Life Pro+ Fixed Index Universal Life Insurance policies.
Indexed universal life insurance policies, on the other hand, are cash value life insurance products that are tied to a specific stock index (or indexes, such as the S&P 500) and provide returns based upon a formula that is correlated to market performance.
Life insurers face unanticipated liability from the continued low interest rates that undercut the returns they anticipated when they priced some of their universal life insurance policies with secondary guarantees.
The low interest rate environment poses a significant challenge for life insurers with sizable blocks of liabilities with promised interest rate guarantees found in annuities or universal life insurance policies, the recently-released annual report written by FSOC members warns.
In late 1998, Cochran and his insurance agent, independent of the trustee (not KeyBank) at the time, decided to replace all of these life insurance policies and the annuity with two variable universal life insurance policies, which had a total death benefit of $8 million.
A Universal life insurance policies offer an investment element and a death benefit, while giving the policyholder the right to increase or decrease the amount of the investment element.
This article extends previous research by examining actual universal life results and providing evidence on the relative effects of all credits and charges (mortality, expense, and surrender) within universal life based on a multivariate analysis for a sample of universal life insurance policies.
Indexed universal life insurance policies are not stock market investments, do not directly participate in any stock or equity investments and do not receive dividend or capital gains participation.
Massachusetts Mutual Life Insurance Company (MassMutual) is introducing two new universal life insurance policies through the workplace to help employers retain key talent by providing executives with greater financial security.
In what appears to be an industry-wide trend, American Family Life Insurance Company (AFLIC) has signed an agreement with Kansas City Life Insurance Company (Kansas City Life) to transfer its remaining variable universal life insurance policies and variable annuities to Kansas City Life.
New premium growth has slowed in the past quarter after the Insurance Regulatory and Development Authority imposed new rules on unit-linked and universal life insurance policies in a bid to reduce product costs and to enhance transparency, market discipline and protection for policyholders.

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