Term Life Insurance
refers to those insurance policies
that have temporary life insurance protection. This means that you are ensured security only for a fixed period of time. Another factor that characterizes this type of policy is that you have to pay low premium compared to other types of life insurance. This is because it builds no cash value and you pay only for the cost of insurance (C.O.I.). The C.O.I. is the amount of money the insurance company charges to keep your life insurance policy in force. And this depends greatly on your age and health at the time you apply for coverage. The C.O.I is usually determined at the time you apply and increases at each policy anniversary as per the Yearly Renewable Term policy. The C.O.I. increases due to the fact that as you get older, it becomes more expensive to insure your life.

The C.O.I. remains same during the initial guaranteed period but increases sharply with time as per a Level Term policy. Term Insurance pays a fixed lump sum to your designated beneficiary incase of your death within the period covered by the policy. The policy protects your family by providing money which they can invest to replace your salary. This also includes resources to cover the immediate expenses incurred by your death.

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As we mentioned in previous articles, UL plans are unbundled, the various components of the plan such as insurance charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundle permanent life insurance products. In this article, we will discuss the investment bonus in the universal life policy.

Investment bonuses are special rider guaranteed by the insurance companies for UL policy that have not existed in any other types of life insurance. As insurers are being forced to increase their COI charges to maintain product profitability, another way to make UL products more attractive for clients is to add or enhance investment and interest bonuses.

Since there are many different approaches to investment bonuses, understanding the interest bonuses of the UL plans before purchasing universal life insurance policy is essential because it will help you to determine how much fund is needed and condition that the maximum investment bonus will be paid to your policy.

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As we mentioned in previous articles, UL plans are unbundled, the various components of the plan such as insurance
charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundle permanent life insurance products. In this article, we will discuss the tax advantage of the universal life policy.
There are many factors that universal life policyholder must consider when go into deciding which investment options to choose within a UL plan. Guaranteed interest accounts, for example, are less risky and indexed accounts which have a larger potential rate of return.

1. Advantage
a) Most UL plans allow the policyholder to allocate deposits in a way that matches their risk philosophy. Such a plan may change its investment allocation as the policyholder gets older, negating the need for the policyholder to monitor the UL investment mix to ensure that it is consistent with the policyholder’s investment philosophy as that changes.

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As we mentioned in previous articles, UL plans are unbundled, the various components of the plan such as insurance charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundle permanent life insurance products. In this article, we will discuss the investment options of the universal life policy. In fact, with policy holder becoming more and more sophisticated, companies offering UL are increasing the number of their investment options to reflect the various investment types found outside of insurance policies.Here are the two main types of investment options offered within most UL insurance policy.

1. Guaranteed Investment Accounts
These type of accounts are available from daily interest accounts to 10 or 20 year guaranteed interest accounts. They appeal to risk-averse clients who would like to see a steady guaranteed growth within their UL plans without being worried of the fluctuation of the stock market. They are much less risky than Indexed Accounts but they also offer less potential return.

The guarantee may be that the return within the UL will be no less than
a) 80% of the return of the 5-Year government bond
b) Equal the 5-Year government bond less two percent
c) 90% of the return of the 5-Year government bond less one percent
In fact, most UL contract may guarantee that the GIA return will never be lower than a certain amount, say 2%.

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As we mentioned in previous articles, UL plans are unbundled, the various components of the plan such as insurance charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundle permanent life insurance products.In this article, we will discuss the minimum and maximum premiums of the universal life policy.
Most companies place contractual restrictions on the minimum and maximum deposits they are prepared to accept in the early years of a UL plan. As an policy holder, you have the right to chose any amount of premium in the between of minimum and maximum premiums’ range. Generally the lower the minimum premium and the higher the maximum premium, the more flexible the UL plan is with respect to funding options.

1. Minimum premium
Many insurance companies allow only minimum premium paid as long as the premium is enough to cover the cost of insurance. Some companies apply the minimum premium restriction only for the first year of the policy. Others require that no less than the minimum premium must be paid in the first year and at least two times the minimum premium must be paid after two years. Yet others require that at least five times the minimum premium must be paid into the plan after five years. Of course, if the first year deposit is greater than five times the minimum premium, no future deposits would be contractually required.
Under universal life option, policy holder can make a large initial premium and do not need to any additional premium again as long as the investment funds in the policy are enough to cover the insurance cost. In Fact, a higher minimum deposit requirement forces the policyholder to put more money into the plan in the early years to build up a fund value within the plan. This is the obligation of insurance company to inform you when the additional premium is required, usually caused by depletion of investment fund in the policy.

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As we mentioned in previous articles, UL plans are unbundled, the various components of the plan such as insurance charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundle permanent life insurance products.In this article, we will discuss the types of death benefit of the universal life policy. The type of death benefit dictates exactly how much will be paid out upon the death of the insured in the future. The more common varieties of death benefit structures found in UL contracts are
1. Level
This death benefit remains level throughout the duration of the policy. This option is the least expensive since the risk decreases over time as the fund values increase.

2. Level plus cash value
This death benefit option pays out the balance of the cash value or accumulating fund along with the initial death benefit amount. This option provides a cost-effective means of providing clients with increasing life insurance coverage.

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As we mentioned in previous articles, UL plans are unbundled, the various components of the plan such as insurance charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundle permanent life insurance products.In this article, we will discuss the types of coverage of the universal life policy. The following is a list of the various coverage types that are available in the marketplace today.
1. Single life
Single life plans are designed to pay a death benefit when the plan’s only insured dies. This is the most popular coverage type sold today.

2. Multiple life
This plan is designed to provide life insurance coverage for more than one life. A death benefit is paid each time an insured dies. Each insured life can be insured for a different face amount.

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UL plans are unbundled, the various components of the plan such as insurance charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundle permanent life insurance products. Most UL policies are actually distinguished by differences in their separate components. In this article, we will discuss The cost and mortality Components of Universal Life insurance
1. Cost of insurance (COI )
a) Yearly renewable term ( YRT )
The cost of insurance increased every year with the actual increasing mortality risk of the policyholder. These type of universal life policy performs very well in the early years because the cost of insurance charges are low. However, they tend to suffer in later years when the COI charges become very large.

b) Level cost of insurance
A popular alternative to the YRT is the Level COI structure where the cost of insurance is scheduled to remain constant throughout the duration of the policy. The main benefit of this plan is that, although cash values are lower in the early policy years, the policy performs well if clients want safe for retirement. Since UL contracts are long-term protection vehicles, the later higher values are desirable.

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Universal life (UL) was introduced in 1981-82, in response to a historically high interest environment and a consumer awareness of the value of self-directed investments
because traditional insurance could not compete with short-term interest rates. the life insurance industry’s response was to introduce new money products, like universal life, whose investment returns would be based upon a pool of new short-term debt and not be weighted down by historical, low-coupon, long-term portfolio assets.

Unlike term and whole life insurances, this policy blends term insurance and an investment account into one contract. Also its premiums can be increased or decreased, paid when due or at unscheduled dates, or stopped entirely and restarted at the owner’s will provided the policy value is adequate to maintain the cost of the insurance.

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

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

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