Accumulation for insurance typically refers to accumulation in life insurance policies. Premiums are paid into a policy and charges and costs are deducted. This is also referred to as account value.
Type
Universal life insurance is a secure option for permanent life insurance where accumulation is a factor. It combines factors from term-life insurance policies with whole-life insurance policies. Universal life insurance pays policy holders interest on their accumulated account balance.
Process
Accumulated value is used to find out a policy holder’s policy amount. Each month, charges are posted to a policy holder’s account for the cost of the policy and any other fees associated with the account and interest is added to the balance. The result of this is the account balance or the accumulated balance in the insurance account.
Purpose
After paying into a policy for many years, the accumulated amount is typically enough to cover the cost and fees of the policy. The accumulated balance in the account then pays the costs and the policy holder never has to invest any more money into the policy.
References
- USLegal: Accumulation Value (Health Care) Law & Legal Description
- Should You Invest in a Cash Accumulation Fund? - Budgeting Money
- Government Publishing Office. "United States Code, Title 26, Internal Revenue Code, Subtitle F - Procedure and Administration, Chapter 79 - Definitions, Sec. 7702: Life Insurance Contract Defined." Accessed July 8, 2020.
- Price, 2018.
- United States Code. "Title 26-Internal Revenue Code, Subtitle A-Income Taxes, Chapter 1-Normal Taxes and Surtaxes, Subchapter E-Accounting Periods and Methods of Accounting, Part II-Methods of Accounting, Subpart B-Taxable Year for Which Items of Gross Income Included, Section 457: Deferred Compensation Plans of State and Local Governments and Tax Exempt Organizations." Accessed July 8, 2020.
- United States Code. "Title 26-Internal Revenue Code, Subtitle A-Income TaxesChapter 1-Normal Taxes and Surtaxes, Subchapter D-Deferred Compensation, Etc.Part I-Pension, Profit-Sharing, Stock Bonus Plans, Etc. Subpart A-General Rule, Section 403: Taxation of Employee Annuities." Accessed July 8, 2020.
- United States Code. "Title 26 - Internal Revenue Code, Subtitle A - Income Taxes, Chapter 1 - Normal Taxes and Surtaxes, Subchapter D - Deferred Compensation, Etc. Part I - Pension, Profit-Sharing, Stock Bonus Plans, Etc., Subpart A-General Rule, Section 401: Qualified Pension, Profit-Sharing, and Stock Bonus Plans." Accessed July 8, 2020.
- United States Code. "Title 26-Internal Revenue Code." Accessed July 8, 2020.
- Government Publishing Office. "United States Code Title 33 - Navigation and Navigable Waters, Chapter 15: Flood Control." Accessed July 8, 2020.
- United States Code. "Title 26-Internal Revenue Code, Subtitle F-Procedure and Administration, Chapter 79-Definitions." Accessed July 8, 2020.
- United States Code. "From Title 26-Internal Revenue Code, Subtitle F-Procedure and Administration, Chapter 79-Definitions, Section 7702: Life Insurance Contract Defined." Accessed July 8, 2020.
- Sabo, 2018.
- Centers for Medicare and Medicaid Services. "2020 Medicare Parts A & B Premiums and Deductibles." Accessed July 8, 2020.
- Internal Revenue Service. "Rev. Proc. 2001-42," Page 1. Accessed July 8, 2020.
- Acker, 2018.
- Investment Company Institute. "Frequently Asked Questions About Individual Retirement Accounts (IRAs)." Accessed July 8, 2020.
Writer Bio
Jennifer VanBaren started her professional online writing career in 2010. She taught college-level accounting, math and business classes for five years. Her writing highlights include publishing articles about music, business, gardening and home organization. She holds a Bachelor of Science in accounting and finance from St. Joseph's College in Rensselaer, Ind.