The difference between universal life insurance and traditional life insurance

Universal life insurance, as a new generation of life insurance products, is really pleasing to the eye, but traditional life insurance and universal life insurance are designed according to the needs of different customers and have their own characteristics. They are similar in that they are both life insurance products, which provide the insured with basic life insurance such as birth, old age, illness, death and disability, but the difference is that:

I. Take risks

At the beginning of signing insurance contracts with customers, traditional life insurance has clearly stipulated the amount of insurance money that the insurance company should pay when the insurance expires or an insurance accident occurs. Its assets are used conservatively and pay attention to safety, and the return on assets is also centered on bank deposit interest. Under the traditional life insurance policy, even if the investment income is lower than the predetermined interest rate, the insurance company must fulfill the payment obligation, and the risk of asset use is entirely borne by the insurance company.

The capital utilization of universal life insurance is centered on securities, and the income is not fixed. Generally speaking, it is relatively high, but it may also be very low. There is no definite guarantee for the due insurance premium and the insurance premium paid in the event of an insurance accident, which is the embodiment of the risk of investment and wealth management insurance. Therefore, the insured must bear the risk of capital gains, and the lower limit of this risk is the two-year resident time deposit rate announced by the People's Bank of China in the same period, that is, there is a minimum income guarantee.

Two. transparency

When designing the premium, the traditional insurance policy did not disclose the flow of the premium to the insured, so it is impossible for the insured to know how the premium he paid is allocated to various expenses.

Universal life insurance operates transparently and the purpose of premium distribution is open. Not only that, as a highly transparent insurance product, Universal Life has set up individual accounts one by one for separate accounting, which can be inquired at any time and receive annual reports every year.

Three. Death pension

Traditional life insurance pays death and total disability insurance according to the fixed amount agreed in the contract;

The payment amount of universal life insurance is not fixed, but also dual, which is the sum of the immediate insured amount and the personal account balance on the day of the insurance accident.

Four. return

The coverage and compensation of traditional life insurance are fixed and stipulated in the contract.

The return of universal life insurance is "the top is not capped, and the bottom is guaranteed". Although the income is directly related to the operating performance of the investment account, the settlement interest rate is not lower than the two-year resident time deposit interest rate of the spot bank.

Verb (abbreviation for verb) monetary value

The so-called cash value refers to the value of a life insurance policy with the nature of savings. We know that as people get older, the mortality rate will rise. Therefore, the insurance premium paid by the insured to the insurance company should increase year by year with the increase of age. In order to consider that the income of the elderly may be reduced due to physical decline when they need protection more, insurance companies will generally adopt a scientific method of balancing insurance premiums and share the insurance premiums payable during the whole payment period, so that the annual insurance premiums will have a fixed standard and will not increase with age. Pay more when you are young and pay less when you are old. Therefore, after the policy takes effect, the "extra" premium will be "saved" in the policy, and this part of the "saved" premium is the cash value of the life insurance policy. It is mainly to ensure the insurance company to fulfill its future payment obligations, and it is also the payment standard when surrender occurs before the termination of the insurance contract.

Therefore, the cash value of traditional life insurance at any time after the policy takes effect for two years has been calculated long ago and remains unchanged during the validity period of the policy;

The cash value of universal life insurance will change with the change of investment account value, which is uncertain and unknown.

Flexibility of intransitive verbs

The premium and insurance amount of traditional life insurance are not adjustable, and the contract is fixed as soon as it is established, and there is no right to increase the protection and insurance amount on the original contract.

On the other hand, universal life insurance is very flexible. The time and amount of payment are determined by the insured himself, and the ratio of risk protection to investment can be adjusted freely, and there is also the option of additional insurance.

Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.