Universal life has become the new Whole Life. It offers guaranteed lifetime benefits at a reduced premium to whole life; this is accomplished by having a lower internal cost of insurance and a less rigid insurance platform. Universal life has some other unique benefits which make it a true leader in the permanent insurance arena. One of its greatest benefits is a dial-able guaranteed death benefit. You can set it to be guaranteed till age 85 with a level premium and then later come and adjust the premium to make it guaranteed till 90 with no new health requirements
What are the common reasons for purchasing a Universal Life Insurance Policy?
- The premiums remain the same and do not increase beyond the guarantees.
- Can provide a cash value account you can use for savings, emergencies or retirement, but generally it is designed for lowest premium to age 100.
- The protection is designed to be dial-able to the year of presumed death and then adjustable if still alive.
- You can use funds from these policies on a tax favored basis.
Who should buy Whole Life?
If you are in the need of insurance which lasts your whole life this is a great option for you. If you are looking for a flexible platform which you can increase or decrease the premium when needed, this is a good choice for you. If you are self employed this is a policy which is inline with the ups and downs of income and needs faced by most self employed individuals. This is also the best choice for most estate planning due to its flexibility.
Final expense is another reason people buy Universal life policies. Small amounts of coverage can be purchased if health is in the standard offer range, if health is below standard a simplified whole life would most likely be a better choice for the purpose of paying final expenses.
Who should not buy Universal Life?
People with a relatively short need for insurance, like 10-15 years should probably look at term. Also if you need a large amount of coverage, term insurance will be cheaper than Universal Life plans in almost all circumstances unless you are looking for coverage to age 90 or greater.
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