Universal Life Insurance is an insurance and investment solution in one, much like Whole Life insurance, but with more flexibility.
Personal Universal Life Insurance offers a life-long coverage with set premium. Initial premiums are higher than those of Term insurance are, but they do not increase dramatically after period of time, as they do with Term contracts. On the other side of spectrum Individual Universal Life Insurance premiums tend to be lower than those of Whole Life Insurance. Because Universal Life policies utilize different investments and don’t offer dividend guarantee as Whole Life does.
Main features of Universal Life polices are:
Adjustable death benefit. Can be increased or decreased at insured’s request
Premium flexibility. Many Universal Life policies allow premium holidays and offsets, considering that policy has enough cash value accumulated to support the cost of insurance. Many will also allow for additional deposits up to allowable amount that is calculated to keep the investments inside of policy account in the tax-free zone.
Tax deferred investment. Cash Value growth in policy not taxed. Only withdrawals are subject to taxation.
Control over investment component. Policy holder can choose from a line up of investment products and assign percentage allocation for the investment of premium amounts left after covering cost of insurance.
Access to cash. Policy holder can access part of the tax-deferred investment account as a source of extra retirement income, to fund child's education, to cover disability expenses or even as an emergency cash account. That can be done via withdrawal of portion of cash value in policy account (subject to tax) or via the loan secured against the policy (usually not taxed).
There are many Universal Life Insurance products on the market, with great variety of options and add-ons. One has to conduct a thorough research to select the appropriate product. You can rely on our experienced team in your search. Sign up now for a free consultation!