Definitions for "Universal life"
Related Terms:
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Life insurance which combines the low-cost protection of term insurance with a savings component that is invested in a tax-deferred account, the cash value of which may be available for a loan to the policyholder. see also whole life, variable life.
A form of life insurance that combines the protection of term life insurance with a savings portion, which is invested in a tax-deferred account earning money-market rates of interest. The policy is flexible; that is, as age and income change, a policyholder can increase or decrease premium payments and coverage, or shift a certain portion of premiums into the savings account without additional sales charges or complications.
A life policy that has flexible premiums and death benefits. Premiums are paid into an interest-bearing account from which maintenance fees, if any, and costs of insurance are deducted.
As in traditional policies, universal life pays a death benefit and accumulates cash value. Unlike traditional products, universal life completely separates the protection element from the accumulation element of the policy. Cash value builds and is used to buy term insurance. The flexible features are the premium, the death benefit, the payment, and the protection periods.
Adjustable life insurance, under which premiums flex, protection adjusts, and the insurance company discloses expenses and other charges to the purchaser.
Flexible premium, two-part contract containing renewable term insurance and a cash value account that generally earns interest at a higher rate than a traditional policy. The interest rate varies. Premiums are deposited in the cash value accounts after the company deducts its fee and a monthly cost for the term coverage.
A life insurance contract under which the policyholder may change the death benefit and vary the amount or timing of premium payments. The initial premium is specified by the insurer, with the policyholder determining the timing and amount of subsequent premiums.
A life insurance policy where both payment and the face amount are flexible within limits. These policies have a cash value that earn interest.
Similar to cash value life insurance, but projects better returns. This is not recommended as the type of life insurance to purchase. Get term insurance here
combines term insurance and a side-fund investment into a single contract. These are interest-sensitive and allow for a more flexible premium payment schedule, varied by the policyholder.
A cash value policy which combines term insurance and an investment
A form of permanent insurance designed to provide flexibility in premium payments and death benefit protection. The policyholder can pay maximum premiums and maintain a very high cash value. Alternatively, the policyholder can make minimal payments in an amount just large enough to cover mortality and other expense charges.
An interest-sensitive life insurance policy that builds cash values. The premium payer has control over how the policy is structured. He has the flexibility to eliminate the premiums (essentially pay up the policy and pay no more premiums) or have the premiums continue for life. It is a matter of juggling three variables: the assumed interest rate, the cash value and the premium payment plan. The policy is interest-sensitive, and if interest rates change from the assumed interest, it will affect the other two variables. In the past, many Universal Life Policies were structured assuming a higher interest rate then was actually received; therefore, most of them have under performed. If you have a Universal Life Policy, you should have it evaluated to see if it needs to have the premiums adjusted to get it back on track. A fourth variable that has not been a factor but could be in the future, and the owner should be aware of, is the Mortality variable. Universal Life policies are usually structured assuming current mortality rates. The insurance companies reserve the right to change those rates.
A life insurance policy where premiums (less expense charges) are credited to an investment account from which periodic charges for life insurance coverage are deducted and to which income is credited. Usually, the policyholder can vary the amount and timing of premium payments and change the amount of insurance.
This is a combination adjustable life insurance, flexible premium policy. The policy owner can select the amount of premium he or she wants to pay and the policy benefits are those which the premium will purchase. On the other hand, the policy owner may change the amount of insurance and pay the premium accordingly.
A type of insurance that combines the characteristics of term life insurance and a tax-deferred savings plan. The insured can pay premiums at any time, subject to certain minimums and maximums, and reduce or increase the amount of the death benefit more easily than under a traditional whole life policy.
Permanent life insurance that is characterized by its flexible premiums, its flexible face amounts and flexible death benefit amounts. Universal life policies are generally interest-sensitive..
A flexible life insurance policy under which the policyholder may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Also has a cash value account which acts as a sort of savings account that builds interest and can be borrowed against. Read more about Universal Life Insurance.
An interest sensitive life insurance policy that builds cash values. The premium payer has control of policy structure He has the flexibility to vanish the premiums (pay no more premiums based on assumptions that are not guaranteed) or have the premiums continue for life.
A combination flexible premium, adjustable life insurance policy. The premium payer may select the amount of premium he or she can pay and the policy benefits are those which the premium will purchase. Or, the premium payer may change the amount of insurance and pay premium accordingly. Many believe this is the only true solution to the "buy term invest the difference" problem.
A type of life insurance in which the cash value varies with the policyholder's payments and the company's investment returns.
An interest sensitive life insurance policy that builds cash values. The premium payer has some flexibility as to amount and frequency of premium payments. It is a matter of considering 3 variables. The assumed interest rate, the cash surrender value and the premium payment plan. The policy is interest sensitive , and if interest rates change from the assumed interest, it will effect the other two variables. If you have a Universal Life Policy, you should have it evaluated to see if you need to increase premiums based on current interest rates. A fourth variable that has not been a factor but could be in the future, and the owner should be aware of, is the cost of insurance variable. Universal Life policies are usually structured assuming current cost of insurance rates. The insurance companies reserve the right to change those rates.
Universal life insurance is a combination of term protection with the cash savings value of whole life. Interest rates paid on the cash value are typically higher with universal life than whole life because they tend to follow the markets. This type of contract is designed with flexibility in mind. Premiums can be paid in a lump sum, annually or anywhere in between. Interest on the cash value is usually guaranteed, but will vary according to the investment performance. Each month deductions are made from the cash value fund to support the costs of the insurance protection. As long as the cash value is substantial enough to maintain the monthly costs, the policy will remain in force, cash value is accessible through loans and withdrawals that will reduce cash value by the amount borrowed plus interest. Withdrawal and/surrender charges may also apply.
whole life insurance product whose investment component pays a competitive interest rate rather than the below-market crediting rate.
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