Information on Universal Life Insurance
Permanent life insurance does exactly what the name suggests in that it provides a lifetime of protection to those carrying coverage. Many are put off by the higher rates that whole life insurance requires and then there are those who don’t want to run the risk of outliving term life coverage. Universal life insurance (UL) is the “Goldilocks” solution as it is the less costly than whole life and yet still more comprehensive than term coverage. It is permanent protection at a better rate. UL offers flexible premium adjustments, which allows policyholders to change their rates periodically and also has a savings component that can grow, tax-deferred.
Insurance companies offer several types of insurance policies:
Index UL: This policy type gives an opportunity to earn income based on one’s index, outside of the flexible insurance premiums.
Group UL: This is the kind provided by one’s employer or union.
The is the best coverage for those wanting life-long protection or who are saving for the future. Business owners looking for a tax-efficient method to protect their business assets may choose this insurance policy too. Keep in mind that any withdrawals from the account value are considered as loans and may accrue interest and reduce one’s death payout as well as lowering the cash value of the policy.
One can adjust the death benefits and choose to reduce them, which helps lower the cost of the policy. Conversely, they may also add to the benefits to increase any future compensation to loved ones upon the policyholder’s death.
Interest can accumulate on the policy cash value. A UL policy’s cash value earns interest contingent upon the current market rates. The interest rate can decrease depending on the market, but insurance companies sometimes provide protection against this by including a minimum performance guarantee.
Premium payment flexibility means that policyholders can reduce their premium rates or stop paying once they have accumulated a certain cash value amount.
Again, the accumulated cash value is tax-free and this helps one in saving more in a shorter time.