Universal Life is a type of Whole Life insurance and is sometimes referred to as “interest sensitive” whole life on insurance exams. The cash value of universal life insurance policies is comprised of a minimum guaranteed interest rate and an excess current interest rate.
Which policy is sensitive to interest?
Which of the 10 types of life insurance is right for you? This article describes the 10 most prevalent types of life insurance, from term to voluntary. In the past, coffee was simply coffee. There are currently espresso, French roast, Columbian, Americano, latte, cappuccino, etc. 
Is intended for limited use, typically between 10 and 30 years. Most term policies can be renewed annually following the expiration of the term, although the premium will increase. Whole life insurance is intended to remain in effect for the duration of the insured’s life (and premiums are paid).
- Whole life insurance guarantees that the premium will never increase and that the policy will accumulate cash value in accordance with the policy’s terms.
- Permanent life insurance is also known as “cash value insurance.” The cash value of a permanent* policy can be borrowed and repaid, which is a popular feature of this type of life insurance policy.
Please note that any outstanding policy loan balances will reduce the policy’s death benefit. ” Permanent life insurance is a type of life insurance in which the cash value can be borrowed and repaid. It accrues cash value proportional to the interest-crediting rate.
- Flexibility is a feature unique to universal life insurance.
- To prepare for the unexpected, the amount of coverage can be decreased or increased, subject to underwriting.
- The purpose of final expense insurance is to cover burial expenses, medical expenses, and other debts.
- Typically, the face value is less than or equal to $50,000.
Typically, final expense insurance does not require medical exams or tests, and as a result, it can be more expensive than fully underwritten policies. Group life insurance is most frequently included in employee benefit packages. The employer determines the amount of coverage provided, which is typically a multiple of the employee’s salary, such as two times salary.
- Interest-sensitive life insurance is any type of life insurance that accumulates cash value in accordance with a fluctuating interest crediting rate.
- There may be interest-sensitive whole life policies, and all UL policies are interest-sensitive.
- Interest-sensitive policies will always have a minimum guaranteed interest-crediting rate.
Variable life insurance contains an additional feature that provides cash value growth based on designated funds (equity funds, bond funds, etc.). Variable life insurance policies are riskier than traditional whole life insurance policies, just as equities carry additional risk and reward.
Variable universal life insurance (VUL) is one of the most prevalent variable life insurance policies. A VUL provides fewer guarantees. Additional premium may be required to maintain the policy if the market declines. To sell variable products, agents must possess a specialized license. Like group insurance, voluntary life insurance is typically included in an employer’s benefit package.
In contrast to group insurance, voluntary life insurance is individually owned, and the applicant chooses the coverage amount. There are three types of voluntary insurance: whole life, term, and universal. Now that you are knowledgeable about 10 types of life insurance, you are prepared to discuss life insurance with a financial professional.
Ask questions! It is essential that you have sufficient knowledge to make an informed decision. * Provided that all premium payments are made on time. WEB.1453.05.15 All articles in the Learning Center are general summaries that can be used when considering your financial future at various stages of life.
The presented information is for educational purposes and is intended to supplement other information pertinent to your situation. This information is not intended as investment advice and does not necessarily reflect the views of Protective Life or its subsidiaries.
- Articles in the Learning Center may discuss services and financial products that are not provided by Protective Life or its subsidiaries.
- The financial product descriptions in the Learning Center are not intended to represent those offered by Protective Life or its subsidiaries.
- Protective Life and its representatives do not provide legal or tax advice.
Before making investment, social security, retirement planning, or tax-related decisions, we encourage you to consult with your financial advisor and legal or tax advisor regarding your unique circumstances. Visit to learn more about Protective Life’s products and services.
What life product is not sensitive to interest?
The cash value of a whole life insurance policy is not very interest sensitive.