Universal life insurance is a kind of universal life insurance, commonly sold in the United States, for the protection of a family's future savings and funds. Under the policies, the surplus of premium payments over the current value of the insurance is accumulated as universal life insurance, credit, which is then credited each month at the time of payment. In this type of plan, the death benefit, the premium amount and the face amount can be altered or changed without any prior notice to the policyholder. It is a tax-free type of plan.
Universal life policies are flexible and come in a variety of plans. The flexible premiums allow policyholders to make adjustments to their coverage, if needed, throughout the life of the plan. They can select universal life policies that offer a wide range of coverage and death benefits at very low premiums. Other universal life insurance policies may offer only a selected number of catastrophic coverage options, with the rest of the coverage provided by features such as cash surrender value, investment return and other features. There are even some universal life policies that provide the option to choose between accounts, with one account offering more flexibility than the other.
In contrast, term, universal life insurance policies provide a limited amount of coverage for a limited period. They are useful when people want to have a small amount of coverage for a specified period, and a large amount of coverage for a longer period. These are typically borrowed against and are not fully refundable. However, in exchange for the limited period of lifetime protection, it is possible to enjoy a higher rate of interest, compared to any other type of permanent insurance policy. Also, unlike other permanent policies, they do not require any investment and do not accrue any cash value.
While both permanent and term types of policies usually come with a yearly deductible, with universal life insurance policies there is no such thing. Instead, there is a certain premium, or annual percentage rate (APR), which you will pay annually. This means that you will pay the same premium amount every year, regardless of your health conditions or health status throughout the year. It also means that the longer you go without making a claim, the lower your monthly payments will be over the long term. Thus, it is very important that you remain within the life coverage limit as determined by the company.
Aside from the flexibility of universal life insurance protection, another important aspect is the tax-free and flexibility of the premium. As long as you pay the entire premium and meet the other requirements, you will enjoy all the advantages of permanent life protection. Of course, this does not mean that you will not have to worry about paying taxes at all, as these will be dependent on your income and age, among other factors. But as long as you follow the rules of the plan, you will never be subjected to harsh tax consequences.
In addition to the flexibility of the premium, another important consideration when buying a universal life insurance policy is the death benefit itself. This is the maximum amount of money that you are guaranteed to receive upon your death, as well as the lump-sum payment if you die. Typically, a person will be allowed up to $1 million dollars in death benefits. You can choose between a fixed and variable cash value when purchasing the universal policy. The fixed cash value offers a return schedule that will give you security for a certain period of time, but the variable cash value allows you to adjust your death benefit or premium amount periodically based on other factors.
Universal life policies are flexible and come in a variety of plans. The flexible premiums allow policyholders to make adjustments to their coverage, if needed, throughout the life of the plan. They can select universal life policies that offer a wide range of coverage and death benefits at very low premiums. Other universal life insurance policies may offer only a selected number of catastrophic coverage options, with the rest of the coverage provided by features such as cash surrender value, investment return and other features. There are even some universal life policies that provide the option to choose between accounts, with one account offering more flexibility than the other.
In contrast, term, universal life insurance policies provide a limited amount of coverage for a limited period. They are useful when people want to have a small amount of coverage for a specified period, and a large amount of coverage for a longer period. These are typically borrowed against and are not fully refundable. However, in exchange for the limited period of lifetime protection, it is possible to enjoy a higher rate of interest, compared to any other type of permanent insurance policy. Also, unlike other permanent policies, they do not require any investment and do not accrue any cash value.
While both permanent and term types of policies usually come with a yearly deductible, with universal life insurance policies there is no such thing. Instead, there is a certain premium, or annual percentage rate (APR), which you will pay annually. This means that you will pay the same premium amount every year, regardless of your health conditions or health status throughout the year. It also means that the longer you go without making a claim, the lower your monthly payments will be over the long term. Thus, it is very important that you remain within the life coverage limit as determined by the company.
Aside from the flexibility of universal life insurance protection, another important aspect is the tax-free and flexibility of the premium. As long as you pay the entire premium and meet the other requirements, you will enjoy all the advantages of permanent life protection. Of course, this does not mean that you will not have to worry about paying taxes at all, as these will be dependent on your income and age, among other factors. But as long as you follow the rules of the plan, you will never be subjected to harsh tax consequences.
In addition to the flexibility of the premium, another important consideration when buying a universal life insurance policy is the death benefit itself. This is the maximum amount of money that you are guaranteed to receive upon your death, as well as the lump-sum payment if you die. Typically, a person will be allowed up to $1 million dollars in death benefits. You can choose between a fixed and variable cash value when purchasing the universal policy. The fixed cash value offers a return schedule that will give you security for a certain period of time, but the variable cash value allows you to adjust your death benefit or premium amount periodically based on other factors.
