How to buy Universal Insurance Insurance Tips

Category: Insurance tips Release Date: 2006-08-01

The Central University of Finance and Wu Changsheng

In 2005, life insurance market, structural adjustment, universal insurance products through a rapid development stage. However, in the first half of the stock market strength, fund and investment related products yields soared amid universal insurance but did not yield a breakthrough, with the same financial products, competition has shown weaknesses. This requires the insured to the characteristics of universal insurance have a clear understanding.

Universal insurance is a kind of payment flexibility, adjustable life insurance amount. The difference between the traditional life-long life insurance is that the former would be the amount of life insurance, life insurance policies in the policy cash value and net risks insurance for the amount of separated to be established as two separate accounts: one is a pure risk protection account, the other is a separate operation the cash value account. Into account the cash value of premiums according to the current period rate of return to accumulate. Insurance policy death benefit is equal to the protection of the then cash value account balance and the sum of account balances.

Insured after paying the first insurance premium, as long as the individual account balance sufficient to bear the risk of the insured amount of net current under the conditions of security costs, the insured may be at the lowest and highest premium from time to time within the range of premiums, not to pay a fixed premiums. The flexibility of universal life insurance premiums is the most prominent features.

As the policy's net risk of the insured amount and the cash value is separate from the universal insurance in the operation more transparent. In addition, the universal insurance cash value of the investment income account for a minimum guaranteed interest rate, current rate of investment return is below the guaranteed interest rate, the accumulated cash value to ensure that the interest rate. From this perspective, universal insurance policyholders assume their investment risks to be smaller.

According to a number of insurance universal insurance product description, the policy effect is usually 10 years, the insured must be to the insurance company to pay a substantial amount of the initial fee. During the first year to pay the most, the initial costs are often paid by insurance premiums accounted for 65% -70%, a relatively large proportion of the previous three years, the fifth year is relatively small. Not only risk premium and the initial cost of universal insurance policyholders to the insurance companies also need to pay other costs, some companies still need to recover part of receiving fees and surrender charges. Therefore, when the risk in choosing not only to universal concern "addition", but also to analyze the insurance company to do the "subtraction", that is more attention to insurance fees deducted situation.

Policy costs. In the early universal insurance, the front-end costs of more common. As competition intensifies, a new generation of universal insurance is more or all of the first manifested as a back-end costs (ie, surrender costs). Front-end costs are usually in each policy year (or monthly) began charging for the front-end cost is very low or no front-end costs of insurance, it does not mean that the policy without additional costs, but through other means to pay. Usually there are several alternative methods. Some insurance companies through mortality costs of the additional costs over and above the one or subtract a certain value, return on investment approach to make up for operating costs and access to operating profit. Of course, the most commonly used or surrender charges. Surrender fees can be a certain percentage of first year premium.

The minimum guaranteed interest rate. Even if the insurance company is less than the actual investment rate of return guaranteed rate of return, they must also press the fixed rate of return paid to policy holders. In China, the insurance companies to promise a guaranteed minimum interest rate at 2%, while the United States will have to be much higher at 4% -5%. In addition to the minimum guaranteed interest rates, insurance companies have a real interest rate settlement Shihai. The actual investment rate of return consists of two parts: a guaranteed rate of return and an additional rate of return. The latter depends on the specific investments to be. In China, the actual return rate of about 3%.