Characteristics of Universal Life assurance

Life Insurance Premiums Tax Deductible - Characteristics of Universal Life assurance

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As we mentioned in the old article, universal life (Ul) was introduced in 1981-82, in response to a historically high interest environment and a buyer awareness of the value of self-directed investments because primary insurance could not compete with short-term interest rates.
Here are some characteristics as follow
1. Catalogue Value
The Catalogue value of a universal life plan is the sum of the gross values of all the investment accounts within the policy, along with income, after deductions for the current month expenses.

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Life Insurance Premiums Tax Deductible

2. Cash Surrender Value
The cash surrender value of a universal life plan is the current Catalogue value, less superior loans and surrender charges. Surrender charges are usually based upon a manifold of the minimum required prime for the policy back-end charges are larger than front-end charges.

3. Premiums & Contributions
Premiums are those amounts needed to pay the cost of insurance charges and other expenses for the policy. Deposits are those excess amounts that are of a pure investment nature.
4. Death advantage Options
The whole of death advantage payable under a universal life policy is based upon 1 of 4 dissimilar options
a)Level death benefit: Level coverage throughout the lifetime of the policy.
b) Level death advantage plus cumulative gross premiums: Death advantage increases by the whole of each gross deposit to the policy.
c) Level death benefit, indexed: The whole of death advantage increases, yearly, by a predetermined percentage.
d) Level death advantage plus Catalogue value: The total whole of death advantage is all the time equal to the initial face amount, plus the gross Catalogue value. This is the most favorite chose by 90% of universal life insurance policies' owners because
the gross Catalogue value is tax free.

5. prime Flexibility
The prime deposits, plus accrued investment income, must be adequate to pay for all expenses and deductions, so as to keep the policy in force, tax exempt life insurance contract, flexible premium.
Universal life is not for every consumer
It's flexibility tends to be reflected in much higher management costs than are found in primary whole life plans and the changeable nature of the plan may make it unsuitable for those clients wanting guarantees

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