<?xml:namespace prefix = o />Jane wanted a life insurance policy that accumulated cash value but allowed her greater flexibility in determining premium payments, premium payment dates, and death benefits. Because of these considerations, Jane decided to take out a universal life insurance policy
universal life insurance
Definition
A form of life insurance that offers flexible premiums, adjustable death benefits, and the ability of the insured to make partial withdrawals from the cash value. Universal life insurance policies generate cash value as the insured’s premium payments are invested into the insurer’s investment fund. The insurer pays the interest at a rate that is competitive with other investments, such as treasury bills, and the insured may use that interest to pay for his or her life insurance premiums.
Definition from Nolo’s Plain-English Law Dictionary
A type of whole life insurance that offers some additional features and advantages. Like whole life insurance, universal life insurance accumulates cash value through investment of the premium payments. The unique feature of universal life insurance is that it has variable premiums, benefits, and payment schedules, all of which are tied to market interest rates and the performance of the investment portfolio. Also, universal life policies normally provide the insured with more consumer information. For example, an insured person is told how much of the policy payment goes for insurance company overhead expenses, reserves, and policy proceed payments, and how much is retained and invested for the insured person's savings. This information isn't usually provided with whole life policies.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:26 pm
“The universal life insurance policy provided the insured a death benefit and accumulated cash value on a tax-deferred basis. The insurer paid interest at a rate competitive with other investments. Such a policy provided flexibility to the insured because the insured was able to vary the death benefit, premium, and timing of premium payments.” Sullivan v. Southland Life Insurance Co., 67 Mass.App.Ct. 439, 440 (Sept. 25, 2006) (Beck, J.).
