Life insurance is basically a contract between an insurer which in many cases is an insurance company, and the insured who is the policy holder, where an agreement is reached that the insurance company will pay a certain amount to designated persons upon the demise of the insured. In exchange, the policy holder pays a premium. The premium is agreed between the insurance company and the policy holder and can be paid regularly or as a lump sum deposit.
Furthermore, insurance policies can be divided into two. Here's a site where you can not only get cheap life insurance, but you can get cheap home insurance.
Protection policies - this is a policy that provides benefits to the benefactors in the event of certain events, which may be illness or death of the policy holder
Investment policies - these policies are aimed at providing growth of capital by regular or single premiums. This is the category in which universal life fall under.
Universal life (UL) is a long term and a permanent insurance policy. This policy is common in the United States of America but can also be found in countries such as Canada. The policy is structured such that excess payment made above the current cost of the cost of the insurance is credited to a cash value of the policy. This cash value usually has an interest credited to the account. The interest rate set is a preserve of the insurance company, but there is a minimum rate of 2%. The cash value and the interest rates are credited each month. Deductions on the cash value are made to pay for charges and fees in the policy. In the instance a policy holder does not deposit money in his or her account, the cash value is used to offset the policy payments that are due.
Characteristics of Universal Life
The structure of Universal Life Insurance is quite similar to that of Whole Life Insurance from which UL was developed. However, what sets UL apart from other forms of insurance policies are its three major and defining characteristics, which are;
1. Flexibility of premium payments
Payment of UL premiums is quite flexible in that payments can be done as the policy holder desires, as long as there is enough cash value in the account to pay for the cost of the insurance.
2. Death benefits
There are two major options that a policy holder can choose from. The first one?death benefit type A or level death benefit allows you to chose a level death benefit that starts as one amount and stays level the entirety of the insurance policy. The second ?type B death policy combines the aspects of death benefits and cash accumulation that has taken place over the years that the insurance policy has been in existence.
3. Cash accumulation
UL premium structures provide for a section of the premium to go into interest rate crediting. There are different strategies that can be used in cash accumulation. When interest rates are pegged to a financial index such as bond or stocks, the policies are known as Indexed Universal Life. A good example of such a policy is the equity indexed universal life.
Where To Get Cheap Universal Life Insurance
Life insurance prices, like most services and products, vary. This variance can be $1,000 or more per month. But if you're a savvy shopper you can avoid overpaying on your life insurance and get inexpensive life insurance with a top notch company. Here's a site where you can not only get cheap life insurance, but you can get cheap home insurance.