Insurance companies regularly create new products to meet new needs. Universal life insurance is a practical insurance policy that appeals to many people. This type of insurance offers the ability to grow an investment account in conjunction with having permanent life insurance. With this type of policy, the policyholder does not need a separate investment account or life insurance policy.
When the policyholder opens the universal life insurance account, they must make a deposit that covers the first month’s premium. If the policyholder makes a payment above the premium, then it counts as an investment balance. The policyholder can make further payments when they want, but the account must always have enough to cover the monthly premium. If the policyholder skips payment, then the premium comes from the investment funds.
Universal life insurance is a flexible type of insurance. As for the insurance, the policyholder decides the amount. They can increase or lower the amount as they choose, as long as they notify the insurance company. As for the investment, the policies vary.
Some policies guarantee a minimum return based on a predetermined investment index. Other policies allow the policyholder to choose among several types of investments – including bonds and stocks.
As long as the policyholder pays the premiums, the insurance remains active. The policyholder might even have the ability to make a loan against the investment. That option depends on the structure of the policy. The policyholder also has options about how the policy will pay out in the event of their death.