Guaranteed vs. Non-Guaranteed Permanent Life coverage Policies
Fifty years ago, most life insurance policy sold were guaranteed and offered by mutual fund contractors. Choices were limited to term, endowment or whole life ideas. It was simple, you paid a high, set premium along with the insurance company guaranteed the death take advantage. All of that changed in the early. Interest rates soared, and policy owners surrendered their coverage to invest the cash value in higher interest paying non-insurance services. To compete, insurers began offering interest-sensitive non-guaranteed policies.
Guaranteed versus Non-Guaranteed Policies
Today, companies present a broad range of guaranteed and non-guaranteed life insurance policies. A guaranteed policy is one in which the insurer assumes all of the risk and contractually guarantees the death benefit in exchange for a set premium payment. If investments underperform or expenses go up, the insurer has to absorb the loss. With a non-guaranteed policy the owner, in exchange for a lower premium and possibly better return, is assuming much of your investment risk too as giving the insurer the right to increase policy fees. If things don’t work through as planned, the life insurance policy owner has to absorb the cost and pay a higher premium.
No comments:
Post a Comment