subject: Universal Life Insurance Coverage: The Basics [print this page] Universal Life Insurance Coverage: The Basics
A type of coverage entitled universal life insurance has been around since the late 1970's, and is designed to provide a flexible package with many options that will cover you through your entire lifetime. Once set up, the account provides basic insurance while at the same time a accumulating cash value that can be used for investment purposes.
The policy's cash value serves as a basis for crediting it with interest comparable to interest rates available from other investments in the economy. The effect of receiving interest rates that are closely related to the stock market from policy that will not boost its principal or previously credited interest is to they serve as a safe investment for risk-averse people.
Universal life insurance remain constant in the benefits provided and the premium amount you pay from the time it is created for you until death (or 121 years old). Its consistency therefore prevents situations were payment rates jump with age, which reduces the risk of seeing the policy expire because the rising payments cannot be met. This is the opposite of the circumstances with term life insurance, which provides a death benefit only in exchange for a very low rate, which escalates up words depending on your health condition and age.
Populations benefiting from this type of insurance include younger consumers, could benefit from establishing a policy when their health situation is good or excellent, non-smokers, who will get significantly lower premiums as a result of avoiding a major risk factor driving rates for insurance. Other groups who would be helped by this policy are parents of young children (who purchase protection that their children will be cared for), and those wishing to the stole a financial gift or endowment to another individual or organization.
There are different forms of coverage of this type of policy, one of which is called variable universal life insurance. This account allows a person to combine saving, investing, and risk protection into one neat and tidy package, while giving the client even greater control over the investment options. Your benefits are not guaranteed, and may be entirely dependent on the investment performance of the variable investment options you select. They also range in the cash value associated with the coverage (a consequence of it being variable), which may lead to higher charges for carrying the policy. The more conservative type of coverage is called equity-indexed universal life, which offers fixed benefits and rates, with investments determined more by the insurance company.
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