Unbundled Life Insurance Policy
What Does Unbundled Life Insurance Policy Mean?
An unbundled life insurance policy is a type of permanent life insurance that includes both an investment and savings component. In addition to providing a death benefit to the policyholder’s beneficiaries, the policy’s investment and savings components can also be passed on to them.
This type of policy is also known as universal life insurance.
Insuranceopedia Explains Unbundled Life Insurance Policy
In universal life insurance policies, the insurance company uses a portion of the premium to cover administrative expenses and fund the death benefit, while investing the remaining premium on behalf of the policyholder.
These policies typically offer the benefit of guaranteed level premiums throughout the policyholder’s lifetime. Additionally, these guaranteed premiums are often much lower than those of equivalent whole life insurance policies. Unlike whole life insurance, universal life insurance allows the policyholder to adjust both the premium and the death benefit as needed. Furthermore, unbundled life insurance policies clearly specify the administrative fees, allowing the policyholder to see how their premium payments are allocated. This transparency is not typically provided in whole life policies.
