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 ?
During the trial, Mosten Investment LP had argued that its universal life insurance policy with the Canadian insurer allowed for unlimited deposits and a guaranteed return.
"Mosten owns a specific insurance contract from 1997, the Architect IIe universal life insurance policy. Mosten argued it can deposit an unlimited amount of money with Manulife and receive an annualized guaranteed return of at least 4.00% -- and possibly a good deal higher -- with one-month liquidity, according to its reading of the contract.
An arm of New York Life Insurance Company has introduced a universal life insurance policy aimed at the long-term care planning market.
1, 2015, establishes for policy illustrations a benchmark-crediting rate, one of many moving parts in an indexed universal life insurance policy. The guideline also establishes a ceiling for index values used in policy illustrations, limits loan crediting rates to 100 basis points over a charged rate and requires additional disclosures.
Simplified Life is designed for consumers seeking the protection, cash value accumulation potential, flexibility and tax advantages offered by a variable universal life insurance policy - with the convenience of a quick-to-issue application process.
Almost all riders are attached to a universal life insurance policy. Therefore, a standard evaluation of the policy must be made, as for any insurance contract.
When it comes to specific products, what is most appropriate for some millennials (as determined after a comprehensive financial assessment that should be conducted for each client or prospect) may be a universal life insurance policy offering not only needed guarantees, but also the potential to access cash value in the contract to cope with costly contingencies while still alive.
One of many similar products is Pacific Life's PremierCare, a universal life insurance policy with long-term care benefits.
Under a universal life insurance policy, the death benefit, cash value and premiums can be altered if a policyholder's circumstances change, and the policyholder can use the interest from the cash value to help pay the premiums.
Eleven years ago Frank and Martha created an irrevocable life insurance trust (ILIT), which purchased a $2-million survivorship universal life insurance policy. Martha has just been notified by the trustee that the annual premium of $30,000 is due.
To offset this risk of loss, the annuity arbitrage strategy also involves the purchase of a guaranteed universal life insurance policy, designed to require level annual premiums until the death of the insured.

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