What Are Normal Universal Life Insurance Rates?
Posted on Tuesday, October 27, 2009
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Universal Life Insurance Rates
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In today’s day and age, where our needs are continuously increasing and so are our expenses, it is important that we make a saving for our future or for our loved ones in the event of our death. Most people consider life insurance policies as the best way of saving for the future. There are several kinds of life insurance policies that people can choose from, depending on their needs and their ability to pay the premiums. Universal Life Insurance policy is one such policy that is regarded as a wonderful saving vehicle, as it offers flexible options to the policyholder.
As Universal Life Insurance policy offer flexibility in the way premiums are paid towards the policy, which is divided into two different accounts, one for the insured sum and the other for a cash value accumulation, this policy is far more preferred than the other life insurance policies. It is similar to Whole Life Insurance policy as far as its term is concerned, as they are both lifelong policies, however they have their differences. These are noticed in their interest quotes that are totally different in nature, setting them apart as two different policies altogether.
While the interest rates of the former grow on a steady basis, the rates of the Universal Life Insurance policy are mostly dependent on the Company’s growth. This means that the rates can slide both ways. If the company shows a gain the interest rates are increased, but if the company shows a loss, the interest rates are reduced. However this rate does not go below the guaranteed standard rate applicable in the policy, which today is between 3-4%. More details to the guaranteed rate offered can be found if you go through the terms of the policy in the policy papers that the company issues to you when you take up a policy.
What Is Universal Life Insurance?
Posted on Tuesday, October 6, 2009
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Universal Life Insurance
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Universal Life Insurance also known as Flexible Premium Adjustable Benefit Life Insurance Policy is a more compliant insurance policy as compared to the traditional Whole Life Insurance policy. However, it is also a permanent life insurance policy like its counterpart and provides protection to the policyholder until death. In this policy, the account value grows and the policyholder has the flexibility of altering the insurance premiums and the death benefit amount, as per their requirement.
As different to Whole Life Insurance, Universal Life Insurance is broken into two parts, one that is put aside as the death benefit and the other invested as a cash value growth amount. The policyholder is free to make changes to these two accounts by putting in more of the premium money into the death benefit amount, thereby increasing its value. They can also choose to increase the cash value amount instead of the insurance amount. The policy decisions are totally at their discretion.
The cash value part of the premiums that one pays towards the policy are invested into bonds, money market funds and mortgages, the returns of which are credited to their policy as a tax-deferred account value growth. This means that the account value grows at a guaranteed minimum interest rate, which at present stands at 4%. However, to know the actual guaranteed interest rate, you must check your policy for details.
The flexibility to increase or decrease the death benefit amount plus the ease of paying lower or even larger premiums as the case may be for the policyholder at that time, makes Universal Life Insurance Policy a convenient option for families that experience financial ups and downs in life. However, they should note that paying a small premium for a long time, may result in a lapse in the policy and hence a loss of insurance protection.
