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 ?
Variable universal life insurance policies are offered by prospectus only.
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 Fund generally invests in various high-credit-quality universal life insurance policies, as well as cash-equivalent securities to enhance liquidity.
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.
The company targets and acquires mainly universal life insurance policies that are no longer desired by individuals in order to build a large portfolio of policies that meet a rigid selection process.
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.
Companies such as Genworth developed term-UL to get out from under the Regulation XXX reserve regime, which covers certain term life policies, and move into the AG 38 reserve regime, which is used to determine the statutory reserves life insurers must hold to support their universal life insurance policies with a secondary death benefit guarantee.
Also, a new interest in group variable and group universal life insurance policies may develop because employees will look at these products to protect their assets and create a cash value.
It's important to note that indexed universal life insurance policies are not stock market investments and do not directly participate in any stock or equity investments.
Securities and Exchange Commission is investigating a subsidiary concerning the suitability of its sales of universal life insurance policies.

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