Posted: Sat Apr 29, 2006 11:22 am Post subject: Understanding universal life insurance
Universal Life Insurance is more flexible than whole life insurance. The death benefit and the premiums can be adjusted according to your needs. You could increase the death benefit.by undergoing a medical examination.
The savings element of this type of insurance accumulates a cash value. You can reduce the premium once enough money is accumulated to cover the costs. The monthly cost of the death benefit and policy administration is deducted from the accumulation fund. Since universal life insurance is adjustable, some companies might allow you to skip the premium payments. If you skip a premium payment, the administrative and death benefit costs are deducted from your cash value. The policy stays till your cash value can cover these costs.
But be careful and note that if you reduce or skip the premium payments and also use up your accumulated savings, then your policy could lapse. It is better to consult your agent before you decide upon something.
Posted: Sat Jun 10, 2006 4:54 am Post subject: Universal life insurance
Hi !
I have recently been going through this section of our forums that my eye got stuck at this post made by Roddick sometime back. Understanding universal life insurance has always been important before opting for it!
I think now that I have some valuable information regarding this topic, I might present you with a small article.
Universal life insurance can be defined as a type of flexible premium, adjustable benefit permanent life insurance. It provides the low cost protection and a savings element (which is invested to buildup a cash value) as well. It has been created to offer more flexibility by allowing the policy holder to shift your money between the insurance and the savings component of the insurance policy. You can change the amount of insurance whenever the needs for the insurance change. But remember, that changes might require the underwriting approval.
Benefits of Universal Life:
Flexibility – You can adjust the premium payments and the death benefits according to your life insurance needs. Here the needs are subject to the requirements and the limitations.
Tax-Free death benefit -- Life insurance proceeds are generally income tax free to the beneficiary under the current tax laws governing individual life insurance.
Security – Like all other life insurance policies it provides the protection for your beloved ones against possible financial adversity in the event of your demise.
Tax-Deferred account value growth -- Your policy's Account Value earns interest at the company's current interest rate considering the federal income tax to be deferred. The current interest rate is guaranteed to be at least 4% a year.
Use of Interests:
The policy allows the insured to use the interest from the accumulated savings, in order to pay the premiums if the savings are earning a low return.
Investments to Grow:
Universal life allows the cash value of investments to grow at a variable rate which gets adjusted monthly.
The Universal Life Policy, it seemed to have become a staple of insurance offering. It mainly got started because its a money maker for the insurance company more so then anyone else. Or a cheap alternative then Whole Life.
Remember, flexibility cost money. The UL will outperform the W/L in the first 10 years or so. Yet permanent insurance should be consider a long term commitment. So if you are contemplating between a UL or WL understand that in 20 years the W/L will always outperform the UL hands down. Go through any relevant universal life insurance information and I'm sure you'll find it out.
Depending upon usage the UL can be effective but for life long insurance plan the WL is hard to beat.
