Universal Life Insurance
For the Investor Who Likes To Prepare for the Future
Universal Life Insurance is a lot like whole life insurance, but different in that the cash value of the policy earns interest. This way, universal life insurance becomes an investment, and not just an insurance policy.
With universal life insurance, your premiums are divided. Part of your payment covers the cost of insurance, and the rest becomes part of the cash value of the policy. The cash value in universal life insurance policies earns interest. Some policies offer a guaranteed minimum interest payment.
Universal Life Insurance is Ideal for Your Family
If you want protection for your entire family but want to leave your options open, then universal life insurance is the perfect choice. Universal life offers guaranteed death benefits (as long as the cost of insurance doesn't exceed the cash value amount) along with a solid investment that you can withdraw or borrow against.
Most universal life insurance policies come with optional term riders, so you can temporarily increase your benefits amount without purchasing a new policy. You can also usually add people to the policy, like a spouse or children. This versatility makes universal life insurance great for growing families.
Universal Life Insurance allows you to Invest Tax-Free
You can defer capital gain taxes on your universal life insurance policy. These gains can be kept in the cash value of the policy until the time of death, and will only be subject to estate taxes. To use the cash value amount before death, you can borrow against it without paying taxes and without ending the policy.
Universal life insurance policies often allow you to choose how much of your premium to put into the tax-sheltered amount. Investments can be safe and guaranteed, or you can put them into something more like a mutual fund.
Other Options with Universal Life Insurance
With universal life, there are three kinds of premiums.
1. Single Premium You pay one amount for the entire policy. The policy remains in effect as long as the cost of insurance does not entirely deplete the cash value or investment.
2. Fixed Premium You make monthly payments for the premium for an agreed upon time. Usually, this universal life insurance policy is in effect long after you stop paying the premiums.
3. Flexible Premium You decide when to make payments and how much. If you go for a period without making a premium, the cost of insurance is deducted from the cash value of the policy. This type of universal life insurance gives you the chance to make one large payment when you first purchase the policy, and make sporadic payments according to your financial situation.
Most policies offer a "Waiver of Premium" option. This way, if you're disabled, you can continue coverage without continuing your premium payments.
Planning for the future is part of starting a family. It means more than just setting a few dollars aside for a rainy day. Universal life insurance gives you the ability to save, invest, and protect your family when you're gone. It helps you now, and it will help them in the future
Talk to your Insurance Agent to ensure Universal Life Insurance is right for you!