Universal Life Insurance Policies
Life insurance comes in a several varieties. However, the basic intent of life insurance is to provide benefits for the survivors of the policy holder in the event of his or her death. One common kind of life insurance is referred to as "universal life insurance." This is a form of life insurance in which the prospective policy holder assumes the total cost of the policy up front. As a result, the designated beneficiaries of the policy holder are assured of a specific amount of a payout once the policy holder passes away.
Some are offered this kind of insurance as a workplace benefit. Normally, the surviving employee's family members are then provided coverage in the amount of one year's salary. Often people opt to buy this kind of insurance on their own, directly from an insurance provider. Other may purchase it as an investment. A paid-up policy can also be borrowed against before the policy holder dies, providing additional flexibility.
If one buys this insurance as a form of an investment, he or she then earns interest on the investment. The interest can be paid out several times per annum or once on a yearly basis. The money put into such a policy is usually invested in safer and lower risk investments, such as blue chip stocks and municipal bonds.
The payout from this kind of insurance can be fully collected once the policyholder dies. The beneficiaries simply provide the required documentation to the insurance provider. Once all is checked out and confirmed by an insurance company official, the money is then paid out from the policy.
Universal life insurance is unique in allowing the policyholder to have both insurance coverage and an investment vehicle simultaneously. If premiums are kept up, the policy builds up cash value over time. The policy holder can be assured that his loved ones are guaranteed a tax-free payout in the event of his or her death.