Universal life insurance is an adjustable, flexible life insurance policy that accumulates cash values based on current interest rates. A policyowner can increase or decrease the death benefit as needed without changing policies. Universal life insurance cash values are affected by the folowing factors:
- Premiums paid
- Cost of insurance or mortality cost
- Interest to the cash value – this credit depends on they type of universal life insurance
Death Benefit Options
- Level Death Benefit – death benefit generally stays level for the life of the policy.
- Increasing Death Benefit – The face amount of the policy + cash value. The risk remains level throughout the life of the policy.
- Cost of Insurance – cost of the term insurance based on the net amount at risk and the insured’s current age
- Insurance Company Expenses – These expenses can be office rent, commissions, salaries, etc.
Other Types of Life Insurance