niversal life insurance is works
just one of several types Universal life insurance works in
of life insurance policy a similar way to a high interest
available through life companies long-notice deposit account. When
today. Unlike term life insurance an insurance premium payment is
or mortgage (reducing) life sent to the life company the
insurance, universal life company deposit the funds into an
insurance gives your insurance interest account after deducting
policy a cash-in value, allowing a nominal expenses charge per
you to withdraw funds accumulated deposit. The funds then gain
on your universal policy as and interest, with interest accrued
when needed. being credited to the account on
a monthly basis. Each premium
This flexible approach to life payment made of course increases
insurance is very popular in the the fund, while compound interest
US and offers a real alternative is earned on the account month
to standard term & mortgage life upon month. The cost of
policies where the policyholder maintaining the insurance product
does not normally get to benefit or products purchased through the
directly from the life insurance universal insurance scheme are
funds, unless they are diagnosed also deducted from the universal
as being terminally ill. account on a monthly basis.
Universal life insurance also
provides policyholders with the Should the insurance policyholder
ability to accrue interest on wish to withdraw funds from their
their life insurance premiums - universal life policy then they
something that a standard life can do so from the cash surrender
insurance policy does not offer. value of the life policy.
Withdrawals are normally
How universal life insurance controlled / limited to a set
number per year. Depending upon upon death or terminal illness
the policy provider there may diagnosis. It is therefore
also be caps on the amount of important to manage the universal
money that the universal life life account to ensure that there
policyholder can withdraw and a is sufficient coverage for your
stipulation on a minimum amount family and dependants in the
of funds that should remain in event of your death. If you don't
the universal life account. have the time to carefully manage
a universal life product then you
It should go without saying that may end up with little to show
withdrawals from a universal life for your life insurance premiums
insurance policy will reduce the if and when a lump sum pay out is
overall amount of funds available triggered.
when a lump sum claim is made
About the Author: Gary Tallon has been writing in the finance industry for over 10 years and is currently working with life insurance for Power Insurance.com.
