Dodgson Insurance Brokers Ltd

Universal Life

This type of life insurance policy puts you, the client, in the driver's seat. These types of policies allow you to determine not only the amount of the insurance you require, but also the investment vehicles that are
funding the cost for the death benefits.

Universal life can seem quite complex on the surface but basically works like this:

The policy is broken down into 3 main parts

the amount of insurance (death benefit)
monthly expense factor (normally a fixed fee each month to run the plan-typically $10-$15)
the account value (this is the amount of surplus funds available to be invested once expenses are paid)

How it works

You determine the amount of death benefit you require and the amount of premium or contributions you wish to make to the policy. The suggested amount of premium can be calculated by software assuming different rates of return on the account value.

The following steps happen each month:

premium is paid into the plan and added to the account value
deductions are made for the cost of the insurance portion of the policy
deductions are made for the expense factor
investment earnings are added to the account value based on the amount in the policy and the investment vehicle you have chosen

The account value can be invested in a number of vehicles, from daily interest accounts right up to foreign index funds.

customer-service@dodgson-insurance.com

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