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The definitions contained herein are for general information only and are not
designed for use in connection with the interpretation of any insurance policy
or annuity policy issued through Insurance Answer Center.
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Life Insurance Glossary Terms 4 A B C D E F G H I J K L M N O P Q R S T U V W Y
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Universal Life Insurance
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Depending on the amount of premiums paid, a universal life policy could be term insurance or permanent insurance. The amount (subject to limits as specified in the policy) and timing of premium payments are flexible. The policy will remain in force as long as the premiums paid and the cash value accumulated is sufficient to cover monthly deductions for mortality and expense charges. Premiums when paid are placed in an account and earn interest. Although the interest rate may change periodically, the rate cannot be less than the rate guaranteed in the policy. The company deducts mortality charges from the account to cover mortality costs and some administrative expenses. The account value, less surrender charges, can be borrowed and is paid to the policyowner if the policy is surrendered. The death benefit may or may not be increased to include the account value depending on the death benefit option elected.
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