If you know the basics of insurance, universal life insurance is easy to understand. Universal life Indonesia insurance offers the low cost protection of a term life insurance as well as the saving element similar to a whole life insurance policy. Unlike whole life insurance, universal life insurance permits you to use the interest from your accumulated savings to pay premiums.
The Two Components of Universal Life Insurance
A universal life insurance policy has two components – a cash account and an insurance portion. The insurance part of the universal life insurance Indonesia is actually a renewable term insurance. In simple terms, it is a term insurance with an investment. The cash account enhances on a tax-deferred base each year and earns either the current rate, or a guaranteed contract rate, whichever is higher.
When you apply for a universal life insurance policy, you get to select the death benefit, cash value, amount of premium and premium duration, according to your financial status and requirements. The premiums, saving elements and death benefits can be reviewed and altered according to your financial circumstances. Thus, the policy offers great flexibility.
Growth in Policy’s cash value
One of the most attractive features of universal life insurance is that the cash value of your policy grows each month on the basis of the ongoing interest rate. When you make your first premium payment for the policy, the insurer will deduct administrative fees and expenses. Any premium that is paid in excess of your expenses and fees is deposited in your policy’s cash value and starts earning interest.
Furthermore, its growth is tax deferred. If you diligently pay your premiums, over time the cash value of your policy can grow to such an extent that it may be used to cover your regular premium payments.
Cashing out is Possible
In situations of a financial crunch, you have the option to borrow against your policy’s cash value at viable rates. Thus, it is crucial to pay your premiums and pay them on time. If possible, you can occasionally pay more, like after a salary hike. This way, you can gain benefits from your policy’s tax-advantaged interest.
This simple structure and accumulated cash value benefit gives universal life much of its premium flexibility. So, be in command; shop for the best universal life Indonesia policy that suits your requirements and budget, and gain myriads of benefits.