Universal Life

Universal Life is one of the most complex types of life insurance. It developed from an increasing demand by consumers for a product that would adapt to their changing needs throughout their lives.

Universal Life is different from other types of insurance as it has it's own investment account attached to it. Your monthly premiums, which include both your life cover and supplementary benefits, are paid into your universal life account. As your investment amount on your policy increases the amount needed for your life cover will decrease. Over time your investment will become bigger than your life cover. This is referred to as the breakthrough point. At this point you no longer need to buy life cover and your entire premiums will allow your investment account to grow.

At the beginning of each month the amount of money in your investment account is calculated. This amount is then deducted from your life cover and supplementary benefits that you need. Cover is then bought on the balance only. For example should you require R500 000 life cover and you already have R50 000 in your investment account you will only need to purchase R450 000 life cover and your premiums are calculated accordingly.

There are a number of benefits to the Universal Life Policy :

• Universal life has a generally low premium
• You are able to stop paying premiums at a certain age if you so choose
• Cover is flexible, in other words you can change, add or even remove benefits from your policy.

Universal life may be complex but it is also flexible and allows you to grow an investment rather than just loose your policy's investment once it has reached its term. It offers life cover and an investment that will grow with time.