An Overview Of Universal Life Insurance Policy

An Overview Of Universal Life Insurance Policy

- Dr. P. Sundara Pandian, M. J. Senthil Kumar & Dr. N. R. Nagarajan

Introduction

Life Insurance provides financial security to the insured's dependents or loved ones, if something were to happen to insured unexpectedly. There are lots of plans available in life insurance, but universal life insurance combines the best options to the insured. It is the affordability of term insurance with the long-term security of permanent or whole life insurance.

Universal life insurance is type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance), which is invested to provide a cash value buildup. Unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his accumulated savings to help pay premiums over time.

Universal Life Insurance Definition

Universal life (UL) insurance is a hybrid life insurance policy which combines elements of term life insurance with an investment savings option. Universal life combines the ability to build savings at the same time provides a life insurance policy. This allows flexibility in choosing savings or investment portion of the premium.

Universal Life Insurance policy is a cash value life insurance policy that combines the low cost of Term Insurance with the savings options and lifelong coverage of Whole Life.

Universal Life Insurance Working Model

Universal life insurance was created under the umbrella of permanent life insurance options to provide more flexibility than whole life insurance. Premiums within a universal life insurance policy are broken down by the insurance company into two categories namely the cost of insurance and a saving component known as the cash value.