How flexible premiums can be both an advantage and a disadvantage of Universal Life Insurance?

How flexible premiums can be both an advantage and a disadvantage of Universal Life Insurance?

Expert Solution

Universal Life insurance refers to a life insurance plan that includes an investment savings element and low premiums.Most Universal life insurance policies will come with a flexible premium option.The policy can accumulate cash value unlike a term life insurance.The premium consists of two parts namely Cost of Issuance and cash value(accumulation)The cost of issuance is the minimum amount required to maintain the policy.Universal Life insurance also offers risk adjusted

Advantages of flexible Premiums

It allows the policy holder the right to vary his/her premiums within a certain limit.

It provides an investment savings element

It offers death payment and the cash value grows as tax deferred

Disadvantages

There will be a long term effect associated with variations in premium payment.

In order to remain as active the policy requires necessary cash value to pay for the cost of Issuance.

Fluctuation in return and increase in expenses will result in failure of savings to accumulate.

This is how flexible premiums can be both an advantage and disadvantage of Universal Life Insurance.

jeff jeffy answered 1 year ago

1. What is the advantage of term life insurance? lifetime insurance as long as premiums are...

1. What is the advantage of term life insurance? lifetime insurance as long as premiums are paid forced savings high rates of investment return more coverage per premium dollar 2. Which of the following policy features typically cost extra? Both waiver or premium and guaranteed insurability Waiver of premium Nonforfeiture values Guaranteed insurability 3.

Explain tax implications of insurance (i.e. life insurance proceeds, healthcare reimbursement, flexible spending accounts, disability premiums/proceeds)...

Explain tax implications of insurance (i.e. life insurance proceeds, healthcare reimbursement, flexible spending accounts, disability premiums/proceeds) Explain insurance needs short-term, intermediate-term, and long-term based on the development of your personal financial plan.

Give both an advantage and disadvantage of both private and public visibility as used in the...

Give both an advantage and disadvantage of both private and public visibility as used in the design of an object (list four items)

Match term with definition: Term Life: Whole Life: Endowment Life: Variable Life: Universal Life: Premiums are...

Match term with definition: Term Life: Whole Life: Endowment Life: Variable Life: Universal Life: Premiums are not fixed, as with traditional insurance policies, but within limits, policyholders may adjust their premium payments based on their needs and investment goals. life insurance that provides coverage at a fixed rate of payments for a limited period of time, after which coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further...

For the same amount of premiums in comparison to whole life insurance, term life insurance generally...

For the same amount of premiums in comparison to whole life insurance, term life insurance generally purchases a.a greater amount of coverage. b.less amount of coverage. c.the same amount of coverage. d.a higher deductible. e.a lower deductible. Annual Cost-of-Living-Adjustment (COLA) changes of coverage levels within long-term care insurance, disability insurance, or homeowner's insurance policies is generally deigned to protect policyholders against a.the adverse event occurring. b.lower rates of return. c.lack of insurability. d.the company defaulting on its payments. e.inflation. Over...

1. For the same amount of premiums in comparison to whole life insurance, term life insurance...

1. For the same amount of premiums in comparison to whole life insurance, term life insurance generally purchases a.a greater amount of coverage. b.less amount of coverage. c.the same amount of coverage. d.a higher deductible. e.a lower deductible. 2. Annual Cost-of-Living-Adjustment (COLA) changes of coverage levels within long-term care insurance, disability insurance, or homeowner's insurance policies is generally designed to protect policyholders against a.the adverse event occurring. b.lower rates of return. c.lack of insurability. d.the company defaulting on its payments....

1. What is universal life insurance? How does it differ from term life and whole life?...

1. What is universal life insurance? How does it differ from term life and whole life? Universal life insurance: (Select the best answer below.) a. is classified as a cash dash value life insurance policyis classified as a cash-value life insurance policy. b. has a savings component like term life insurancehas a savings component like term life insurance. c. is a combination of whole insurance and a death benefitis a combination of whole insurance and a death benefit. 2. What...

Question

How flexible premiums can be both an advantage and a disadvantage of Universal Life Insurance?

Solutions

Expert Solution

Related Solutions