A universal life insurance policy gives you the flexibility to choose the amount of protection that best fits your needs. The key to a universal life policy flexibility is the cash value. Each premium goes into the cash value and earns the current interest rate. This interest rate accumulates on a tax-deferred basis. The policy also offers a guaranteed minimum interest rate. Flexible death benefit amounts and premiums allow you to keep pace with today’s changing life circumstances while building tax-deferred cash value.
As the policy accumulates with cash value, you can adjust the amount and the timing of premium payments depending on factors such as past premiums, policy values, and current interest rates. The policy remains in force as long as you have sufficient gas value in the policy to deduct the monthly cost of insurance even if you skip premium payments.
You can either take a tax-free loan on your cash value or make a partial withdrawal period for the money you borrow, interest is charged on the outstanding loan, but the borrowed money continues to earn interest. Withdrawals on the policy reduce the death benefit and may be taxable.
Most universal life policies contain a surrender charge, usually during the first 10 to 20 years. This charge decreases each year until It vanishes. It applies if the policy is surrendered or last or reduced the face amount.
With universal life insurance, you have flexible coverage. With universal life insurance, you can tailor a life insurance policy that fits your unique circumstances, protecting the lifestyle you and your family enjoy and addressing your specific financial plans. Particular examples would include purchasing a home in want guaranteed coverage for the length of the mortgage. You’re a business owner who wants to implement a succession plan for a family member to take over ownership. You’ve committed to pay for your child’s college education and anticipate you’ll pay the balance within five years of graduation.
With universal life insurance, your policy can be customized to begin and end when you want. With a flexible guarantee., you determine whether your policy is guaranteed for a certain number of years or to a specified age up to 121. You choose the combination that best fits your primary concerns.
Universal life insurance provides a death benefit guarantee as long as your scheduled premiums are paid. You lock in a premium right at the beginning of the policy. When premiums are paid as scheduled, your policy will not lapse even if interest rates decrease or if insurance costs were administrative expenses increase. Universal life insurance offers a single, limited, or level pay option. Issue ages or based on last birthday versus nearest birthday. It is essential to note the death benefit Guaranty could be affected by deviations from the scheduled premium, the timing of the premium payments, or specific transactions such as policy loans or partial withdrawals.
We can go over whole life insurance, term life insurance, or universal life insurance. We offer a wide range of these products and can help you determine which one fits your situation the best. If you want more information on universal life insurance, don’t hesitate to contact a licensed professional at Songer Benefits.