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Universal Life
Insurance
Establishes Cash Value |
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Universal Life Insurance is a flexible life insurance
policy.
Universal Life Insurance lets you vary your policy premium
payments and
adjust the face
amount of your life insurance coverage.
Universal life insurance contracts became of age in the early 80's when interest rates were high and
traditional policies were limited to lower
interest rates of return. Not only did the public want a higher
rate of return on their policies, they also
sought greater flexibility. Consumers want the protection
provided by traditional policies, but moreover want:
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the flexibility to change the death benefit amounts
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higher interest rates credited to their policies
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the flexibility to increase or decrease the face amount of
the insurance policy.
Cash Values are the total
premiums that are paid for the policy less the
deductions for expense charges and the cost of insurance. The
remaining premiums paid for the universal life insurance go into
a policy account that earns interest. If your universal life
yearly premium payment plus the interest your account earns is
less than the charges, your universal insurance account value
will become lower. If it keeps dropping, eventually your
universal life insurance coverage will end. To prevent this, you
may need to start making premium payments, or increase your
premium payments, or lower your death benefits.
This policy is similar to whole life
insurance. Again, the value of this type of policy is in its flexibility. Both the face amount of death benefit and
the premium payments are flexible. The death benefit can be
increased but is subject to insurability or decreased without
surrendering the policy. A range of premium payments
can be made to the policy, from a minimum amount to a maximum amount
allowed by internal revenue rules. It has the potential for
greater cash value growth then whole life if interest rates
remain high through the life of the policy. The policy shifts
some of the risk for maintaining the death benefit to the
insured. The policy will lapse; that is, the death benefit will
no longer be in force, if the cash value or premium payments are
not enough to cover the cost of insurance. In a whole life
policy, as long as every premium payment is made, the death
benefit
is guaranteed to be paid if the insured dies.
Even if there is enough in your policy account
to pay the premiums, continuing to pay premiums yourself means
that you build up more cash value. Annual statements are
supplied for each policy to the policy holder that
illustrate the current status of the policy
account. As with traditional policies, this type of policy allows for tax-favored cash
value buildups and income tax free proceeds at death. Please
keep all of these issues in mind when making your decision as to
which type of policy to purchase.
TermLifeAmerica.com-
Lewis Fink is licensed as an insurance agent
offering Life Insurance in the following states:
Alabama - AL,
Arkansas - AR,
California - CA,
Colorado - CO,
Connecticut - CT,
Delaware - DE, District of Columbia - DC,
Florida - FL,
Georgia - GA,
Idaho - ID,
Illinois - IL,
Indiana - IN,
Iowa - IA,
Kansas - KS,
Kentucky - KY,
Louisiana - LA,
Maine - ME,
Maryland - MD,
Massachusetts - MA,
Michigan - MI,
Mississippi - MS,
Missouri - MO,
Montana - MT,
Nebraska - NE,
New Mexico - NM,
New Jersey - NJ,
New York - NY,
North Carolina - NC,
North Dakota - ND,
Ohio - OH,
Oklahoma - OK,
Pennsylvania - PA,
Rhode Island - RI,
South Carolina - SC,
South Dakota - SD,
Tennessee - TN,
Texas - TX,
Utah - UT,
Vermont - VT,
Virginia - VA, and
Wisconsin - WI.
Not all insurance products from all insurance companies are available in
all states.
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