From the course: Risk Management and Insurance Planning: Designing for Client Needs
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Universal life insurance
From the course: Risk Management and Insurance Planning: Designing for Client Needs
Universal life insurance
If a financial planner sees a client that highly values flexibility and tailored financial products, universal life is definitely one that will be considered. Universal life is a hybrid life insurance product that offers the insured more flexibility than a comparable whole, whole life product. The best way to understand universal life is to think of it as a term life insurance policy and an investment fund combined into one contract. The term insurance component is a 1-year renewable term policy, and the investment fund is like the cash value account of a whole life policy that we just talked about. There are significant differences, and we will discuss those later. But before we go further, I want you to recall the graph that showed the level premium. Our attention is on how the Universal Life Policy manages the excess premium, which is effectively the money above and beyond the costs associated with providing insurance at the specific age, but needs to be invested to provide for the…
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