Life Insurance Learning Center - Term Life Insurance Types
Universal Term Life Insurance
Part 1 of this Life Insurance Company Policy Type
This policy is a relatively new type of cash value insurance contract. Generally, though, it has more transparency and flexibility than other cash value insurance policies.
Let us examine the transparency factors in universal life insurance first. Transparency when talking about life insurance means that the policy is unbundled, or broken down into its savings, expense and protection components. For instance, when the policy owner pays a premium, the life insurance company will take out a charge for expenses and will add the rest to the cash value of the policy. Then, the life insurance company pays for the mortality charge, and maybe an additional charge, out of the cash value, which pays for the protection of the life insurance policy. The amount taken out also adds interest to the remaining cash value. So, in a nutshell, this policy is kind of like a savings account and a one-year renewable term account all in one.
Another factor about the transparency of this policy is that the money that the premium payer puts in to the policy is recycled into various aspects of the policy. Ultimately, this benefits the policy owner and the company at once.
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