Benefits of Universal Life Insurance
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What Is Universal Life Insurance?
Universal Life Insurance is a type of cash value life insurance that offers both low premiums and a saving component. These policies have two components – a cost of insurance (COI) amount and a saving component (cash value).
The COI is the minimum amount of premium to be paid to keep the policy active. It can vary with the age, health, and life expectancy of the policyholder.
The savings component consists of the collected excess that accumulates within the cash value portion of the policy. The cash value earns interest based on the current market rate.
Advantages of Universal Life Insurance:
1. Death benefit protection – As long as the policyholder pays the sufficient premiums, the protection offered by the policy never ends.
2. Flexibility – These policies are designed to offer flexibility and can be adjusted to fit your personal needs. You can pay higher premiums more frequently, pay fewer premiums, skip payments, or even use the accumulated cash value to pay premiums.
3. Savings – Policyholders can access a portion of the cash value without affecting the guaranteed death benefit. There are no tax implications for policyholders who borrow against the accumulated cash value of their policy.
4. Adjustable death benefit – Universal Life Insurance plans provide enough flexibility to lower or increase the death benefit at any time to suit the policy holder’s financial needs.
5. Adjustable coverage – The policyholder can choose to increase the cash value of the policy depending on what makes sense for each stage of life. This way the policyholder can meet any need at different times of their life.
6. Lifelong coverage – This policy offers lifelong coverage at far lesser rates than whole life insurance policies. The cash value can also grow according to the performance of the insurer’s portfolio and can be used to pay premiums.
7. Guaranteed interest rate – Cash value is guaranteed to keep growing over time. The interest can vary based on the market value.
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