Universal Life Insurance
Universal Life Insurance is a type of flexible permanent life insurance that offers the low-cost protection of term life insurance as well as a savings element, which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder’s circumstances change.
Key Features:
Adjustable Premiums: Policyholders can adjust their premiums within the guidelines set by the policy. This flexibility allows for increased affordability or concentration of investment, according to policyholder needs.
Adjustable Coverage: Coverage amounts can be modified to suit changes in the policyholder’s life, such as financial responsibilities or family coverage needs.
Investment Element: Part of the premium goes into investments that grow tax-deferred over time, increasing the value of the cash component of the policy.
Annual Reports: Insurance companies must provide annual reports detailing policy performance, including information on investments and any changes in charges or credits to the account.
Governing Regulations:
Universal Life Insurance is regulated by various laws and standards to ensure customer fairness and performance transparency. Notable examples include:
Life Insurance Act: In many jurisdictions, this act will define the parameter within which life insurance operations must be conducted.
Guidelines on Consumer Protection in Financial Services: These guidelines strive to fortify the rights of consumers by ensuring fair commitment practices by financial institutions.
Did you know?
Despite its flexible nature, Universal Life Insurance still requires careful consideration to manage as costs can increase as one ages. Comprehensive understanding of policy details like expense charges, assured interest rates, cost of invasive benefits and options on death benefits are necessary for full utilization.
For further reading or research, always refer to local regulations or consult a financial advisor well-versed in life insurance complexities.
