Universal life insurance options and the drawbacks
by Guest » Tue Feb 09, 2010 10:11 am
I've often read about the death benefit and the investment options offered under Universal life insurance. But I'm not too sure of the drawbacks of such policies.
Total Comments: 24
Posted: Fri Feb 12, 2010 09:29 am Post Subject:
Ex. a $5000 premium will guarantee the policy to age 80
a $6300 premium will guarantee the policy to age 95
a $6400 premium will guarantee the policy to age 96
I'd really wonder till what age would people look for a guaranty! Do they really pay more than $5000 to get their policies guaranteed beyond 80 years?
Posted: Fri Feb 12, 2010 11:58 am Post Subject:
It's not being guaranteed for 80 years. It's being guaranteed to age 80. As for the $5,000, that is either a lot or a little depending upon how much insurance we are talking about. I was just using made up numbers to give an example.
A healthy 70 year old who has the goal of leaving money behind at death whenever death occurs doesn't want to pay a premium that will is only guaranteed to age 80. What he doesn't want to happen is to pay $5,000 a year and then still be alive at age 80 and have to pay $12,000 to keep the policy in force that year and then pay $13,000 the following year, etc.
Simply think of these things as lifetime term policies.
Posted: Fri Feb 12, 2010 12:00 pm Post Subject:
...alternatively, these are basically what a whole life policy would look like with no dividends and no non-forfeiture options.
Posted: Fri Feb 12, 2010 02:22 pm Post Subject:
Hahah, take whole life insurance, remove all the guarantees, drop the dividend, and you now have universal life insurance!
:|
Posted: Fri Feb 12, 2010 02:49 pm Post Subject:
No. All of the guarantees aren't removed. UL with a secondary guarantee has a guaranteed premium and a guaranteed death benefit.
Posted: Fri Feb 12, 2010 03:57 pm Post Subject:
No. All of the guarantees aren't removed. UL with a secondary guarantee has a guaranteed premium and a guaranteed death benefit.
and 60% less premium! :shock:
Posted: Sat Feb 13, 2010 06:27 am Post Subject:
I think it's good to have such a policy since we don't need to pay any interest under circumstances that we need to withdraw money for other purposes. This not the same with the WL policies!
Posted: Sat Feb 13, 2010 01:28 pm Post Subject:
No. All of the guarantees aren't removed. UL with a secondary guarantee has a guaranteed premium and a guaranteed death benefit.
You and I both know there is a difference between regular old UL and SGUL, and that reference was made with respect to the former.
Posted: Sat Feb 13, 2010 03:11 pm Post Subject:
BNTRS, I don't have any doubt that you have an excellent understanding of this. Much of what I write is for the benefit for the vast majority of people who read these threads, but don't comment.
Posted: Fri Feb 19, 2010 12:36 pm Post Subject:
Universal life insurance policies can offer you great returns but at the same time they are high risk. Consider this only if you know the market really well, and are confident that you have the time and inclination to monitor your investments through the years. The gains in these policies are always realized in the long term, so pulling out of the policy prematurely may not benefit you as much as staying with it for the long haul will.
If investment is your reason for a VUL, consider an affordable term life policy that will provide adequate coverage. You can then invest the difference in premiums (between VUL and term) in tax deferred investment vehicles such as annuities (life insurance accounts), IRAs, Roth IRAs and even educational accounts like the 529s. It is important to use a stable investment vehicle with guaranteed returns and great tax benefits.
Denise at AccuQuote
Disclaimer: I work for AccuQuote and this is my personal opinion.
Posted: Fri Feb 12, 2010 09:29 am Post Subject:
Ex. a $5000 premium will guarantee the policy to age 80
a $6300 premium will guarantee the policy to age 95
a $6400 premium will guarantee the policy to age 96
I'd really wonder till what age would people look for a guaranty! Do they really pay more than $5000 to get their policies guaranteed beyond 80 years?
Posted: Fri Feb 12, 2010 11:58 am Post Subject:
It's not being guaranteed for 80 years. It's being guaranteed to age 80. As for the $5,000, that is either a lot or a little depending upon how much insurance we are talking about. I was just using made up numbers to give an example.
A healthy 70 year old who has the goal of leaving money behind at death whenever death occurs doesn't want to pay a premium that will is only guaranteed to age 80. What he doesn't want to happen is to pay $5,000 a year and then still be alive at age 80 and have to pay $12,000 to keep the policy in force that year and then pay $13,000 the following year, etc.
Simply think of these things as lifetime term policies.
Posted: Fri Feb 12, 2010 12:00 pm Post Subject:
...alternatively, these are basically what a whole life policy would look like with no dividends and no non-forfeiture options.
Posted: Fri Feb 12, 2010 02:22 pm Post Subject:
Hahah, take whole life insurance, remove all the guarantees, drop the dividend, and you now have universal life insurance!
:|
Posted: Fri Feb 12, 2010 02:49 pm Post Subject:
No. All of the guarantees aren't removed. UL with a secondary guarantee has a guaranteed premium and a guaranteed death benefit.
Posted: Fri Feb 12, 2010 03:57 pm Post Subject:
No. All of the guarantees aren't removed. UL with a secondary guarantee has a guaranteed premium and a guaranteed death benefit.
and 60% less premium! :shock:
Posted: Sat Feb 13, 2010 06:27 am Post Subject:
I think it's good to have such a policy since we don't need to pay any interest under circumstances that we need to withdraw money for other purposes. This not the same with the WL policies!
Posted: Sat Feb 13, 2010 01:28 pm Post Subject:
No. All of the guarantees aren't removed. UL with a secondary guarantee has a guaranteed premium and a guaranteed death benefit.
You and I both know there is a difference between regular old UL and SGUL, and that reference was made with respect to the former.
Posted: Sat Feb 13, 2010 03:11 pm Post Subject:
BNTRS, I don't have any doubt that you have an excellent understanding of this. Much of what I write is for the benefit for the vast majority of people who read these threads, but don't comment.
Posted: Fri Feb 19, 2010 12:36 pm Post Subject:
Universal life insurance policies can offer you great returns but at the same time they are high risk. Consider this only if you know the market really well, and are confident that you have the time and inclination to monitor your investments through the years. The gains in these policies are always realized in the long term, so pulling out of the policy prematurely may not benefit you as much as staying with it for the long haul will.
If investment is your reason for a VUL, consider an affordable term life policy that will provide adequate coverage. You can then invest the difference in premiums (between VUL and term) in tax deferred investment vehicles such as annuities (life insurance accounts), IRAs, Roth IRAs and even educational accounts like the 529s. It is important to use a stable investment vehicle with guaranteed returns and great tax benefits.
Denise at AccuQuote
Disclaimer: I work for AccuQuote and this is my personal opinion.
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