Owner, Wright Insurance Agency, Great Pittsburgh Area
It varies by UL policy and company, but here are a few basics. There are basically 2 parts to all ULs, but there may be more. The one I have has 3 parts.
Part A is how much you pay into for just the life insurance coverage and part B is what goes into the accumulation account to make the policy grow money wise. A UL has flexible premiums meaning you can pay in as little or as much as you want within a specified amount within the contract guidelines. There is also the target amount which is what you probably should be paying in minimally. If you pay the minimum, it basically is a term policy that continues. If you decide you want the account to grow, you can put more money into to make the cash accumulation grow.
I usually tell the clients I work with to think of it as a permanent life policy with a high yield bank savings account since most will offer you at worst a 3% return for ever dollar you put into the accumulation section of the account. Do keep in mind that rates maybe be more or less depending on the policy and current interest rates that the insurance company uses.
There are many other factors in these types of life policies, but that is the basics of it.
Universal Life (UL) Insurance receives the premium from the policy payer. The policy expenses are deducted from the premiums paid. Then the net premiums are credited with whatever method the universal life insurance employs: interest rate for current assumption UL, indices returns for indexed UL and separate sub accounts for equities and bond performance.
.JPG){kind=avatar}
Part A is how much you pay into for just the life insurance coverage and part B is what goes into the accumulation account to make the policy grow money wise. A UL has flexible premiums meaning you can pay in as little or as much as you want within a specified amount within the contract guidelines. There is also the target amount which is what you probably should be paying in minimally. If you pay the minimum, it basically is a term policy that continues. If you decide you want the account to grow, you can put more money into to make the cash accumulation grow.
I usually tell the clients I work with to think of it as a permanent life policy with a high yield bank savings account since most will offer you at worst a 3% return for ever dollar you put into the accumulation section of the account. Do keep in mind that rates maybe be more or less depending on the policy and current interest rates that the insurance company uses.
There are many other factors in these types of life policies, but that is the basics of it.