Different Types Of Life Insurance
Universal Life Insurance
Universal life insurance is a variation of whole life insurance. It is a blend of term insurance and a savings account. It earns interest at a money market rate, the policy holder paying an annual fee for coverage, which includes a fee for managing the policy. Funds not used for paying the life insurance earn a tax deferred interest.
With a universal life insurance policy, the premium can fluctuate. The policy holder decides how much to devote toward insurance and how much toward savings. The face amount of the policy can be changed as well as the amount of premium payments and how often they are paid. However, the insured must make certain their savings are large enough to cover the monthly premiums for the insurance as well as the policy expenses. If the savings are not sufficient enough, the monthly charges will consume the cash value and the policy will be of no value.
Universal life insurance offers two options. The first option is keeping the death benefits the same from year to year if the policy holder does not request any changes. The second option is having the death benefit at any time stay equal to the original face value in addition to the policy's cash worth.
Universal life insurance can often give an elevated interest rate when inflation rises, even if the insuring company guarantees a low rate. Because of this risk, premiums are lower for whole life insurance but pricier for term insurance for younger individuals. In addition, when the price for managing the policy is added to the premium, the policy holder will receive a lower return on their investment. It is crucial to keep in mind that changes in interest rates will affect both a policy holder's yields and premiums.
Variable Life Insurance
Variable life insurance is a type of permanent life insurance that allows the holder to target their premium to one or more detached investment funds. These funds can be fixed income investments, stocks, bonds, or money market funds. Depending on the company policy, the holder can change their investments from two to five times annually. Unlike universal life insurance, with variable life insurance the insured can manage the investment of their cash value.
The policy, however, can be risky because the investment has the ability to rise or fall. The cash value and investment will differ, depending on what the investment fund does. The death benefit cannot fall below the total amount of life insurance primarily purchased. As with traditional whole life insurance, the policy holder pays fixed premiums and can borrow against the policy at either fixed or variable rates.
Because an individual decides where to invest their money and put themselves at risk, variable life insurance should be considered. Insurers must, by law, offer variable life insurance by prospectus. A prospectus is a document that gives the prospective policy holder important facts concerning the company and the policy. Variable life insurance can often cost more than other varieties of cash value life insurance. According to current laws the cash value of variable life insurance, similar to those of universal life insurance and whole life insurance, cannot be taxed until the policy holder cashes in their policy.
Universal Variable Life Insurance
Universal variable life insurance is also commonly referred to as flexible premium variable life insurance. This kind of policy combines the flexible features found in universal life insurance policies and the investment alternatives of variable life insurance. As with universal life insurance, the policy holder can choose to raise or lower their premiums in a single policy. As with variable life insurance, individuals have the right to decide how their cash worth will be invested.
The insurance company does not have to make any kind of guarantee on the policy holder's cash value. With universal variable life insurance, the value of the cash fund is in direct relation to the market worth of the assets in the cash worth fund. Therefore, a policy holder could have $15,000 in net cash worth one day and $10,000 on the following day, dependent on market fluctuation. Thus, one of the central problems with universal variable life insurance is that the policy holder can lose their insurance coverage.
Adjustable Life Insurance
Adjustable life insurance is another variety of permanent protection that allows the policy holder to change the amount of their premiums. They can also increase or decrease the face amount of the policy, or lessen the protection period. If the policy holder increases the death benefit, they must prove that they are still in fact insurable.
Related Tags: life insurance, term life insurance, life insurance policies, variable life insurance
Sarah Martin is a freelance writer specializing in home improvement, life insurance, and education. For more information on life insurance policies or for a free quote, please visit http://www.equote.com. Your Article Search Directory : Find in Articles
Recent articles in this category:
- Important Things to Know About an Assisted Living Residence in Texas
n assisted living residence is a facility designed for senior citizens or persons with disabilities - Understanding How the Probate Process Works
The probate process is required within the U.S. to settle estates of deceased persons. The time requ - Fun Ideas for the Family During the Christmas Holiday
The Yuletide season is one of the most awaited holidays of the year because it is the time for joy a - How To Find The Right Composite Decking Deck Builders
Another rising home improvement project homeowners are starting to do a lot more of is the composite - Every Home Should Have A Radiant Barrier
The most easy and successful home improvement project you can do to your House, would be to install - The Different Types Of Rain Gutters
When purchasing a house or planning to do improvements to a home, there is always one project that s - How To Get The Best Replacement Windows For Your Home
Installing replacement windows can be the single most important home improvement project you can do - Holiday Accommodation Gold Coast: Pointers For Selecting The Best
With a multitude of holiday accommodations in Gold Coast, choosing the one for yourself can be quite - Want Holiday Accommodation In Gold Coast Queensland? Get Online To Find The Best Deal In A Quick, Co
There are several ways to find holiday accommodation in Gold Coast. You may refer to travel guides t - Celebrate The Ten-days Festival Of Navratri.
Dasara known as Dussehra, Navaratri, Vijaya Dashami is a festival of triumph of GOOD over Evil. The
Most viewed articles in this category:
- Adoptees Need Support When Voicing Feelings about Birth Parents
"I feel like a mistake.""I'm not like them.""Where's my family?""Why can't I find a suitable career? - Progressive Cooking: All About 'cuisine'
The French are known for their interest in art and all that is fine. It therefore comes as no surpri - Moroccan Decor - Oh My! Make Your Home Shine With Moroccan Rugs and Tapestries.
It is said in Morocco that he who enters Fez with a rug will leave with a moneybag. This saying o - Online Criminal Background Checks-Importance & Ease
Have you ever thought your new neighbor looks like one of the pictures on the post office bulletin b - Installing A Burglar Alarm
Want to protect your home? Ready to install a burglar alarm? The popularity of the home burglar ala - Lowe's Backyard Playground Sets
Lowe's is an excellent first place to look for anyone who is looking for the best swing sets on the - How Could Short Term Health Insurance Help Me?
Short-term health insurance plans allow people to have health insurance for a limited amount of time - Watch Out For Those Stinky Skunks!
There are various species of skunks found throughout the United States including the striped, spotte - Asthma In Kids: An Increasing Epidemic
Many believe that the majority of asthma cases are confined to adults, but this is definitely an inc - Stairlifts For Riders Of Above Average Weight
A stairlift is an affordable device that is used to give people with limited mobility access to the