Life insurance is an essential cover to have when you have dependents. When you decide to get life insurance, it can become a hassle to know where to start and find the best option for you. It doesn’t need to be a hassle. You just have to read about the different types of life insurance and determine which will be the best option for you. If you are undecided and wondering what universal life insurance is, here is more about this type of insurance.
What is universal life insurance?
Universal life insurance is primarily sold in the United States of America. It is a type of flexible permanent life insurance which offers a low-cost protection, such as term life insurance. But it also has a savings element such as whole life insurance which is provided to build a cash build up. It is a type of cash value life insurance. The terms of the policy state that the premium payments above the current cost of the insurance are added to the cash value of the plan. The cash value is credited each month with interest which is determined by the insurer but has a contractual minimum rate. The death benefit, premiums and savings component can be reviewed and altered at the policy holder’s circumstances change. This type of insurance allows the policyholder to use the interest from his accumulated savings to help pay premiums over time.
Uses of universal life insurance.
There are a lot of uses regarding universal life insurance. It may be used for final expenses such as funeral, burial and unpaid medical bills. It can be used as an income replacement for a spouse and dependent children. It can be used for debt coverage, to pay off personal and business debts such as a mortgage or business loan. It can be used for estate liquidity or estate replacement. It can be used as key person insurance which means it will protect a company from the economic loss suffered when a key employee or manager dies. It can also be used as an executive bonus, controlled executive bonus, split dollar plans, non-qualified deferred compensation and a lot more.
The benefits of this insurance while you’re still alive.
There are a lot of living benefits to this type of insurance. Many people use this type of insurance as a source of benefit to the owner of the policy, which provides benefit to the beneficiary. These benefits include loans, withdrawals, collateral assignments, split dollar agreements, pension funding and tax planning.
The different types.
Single premium: A single premium is paid for a single, substantial, initial payment. Some policies contractually forbid any more than the one premium, and some plans are casually defined as a single-premium. The policy remains intact as long as the cost of insurance charges have not depleted the account.
Fixed premium: Periodic premium payments are made associated with no lapse guarantee in the policy. These fees are for a shorter time than the policy is in force. Such as the payments may be paid for ten years, with the intention that after that the policy is paid up.
Flexible premium: This allows the policyholder to vary their premiums within certain limits. Each variation in payment has a long-term effect that must be considered. Yearly illustrative projections are recommended to be requested from the insurer so that future payments and outcomes can be planned.
If you are still wondering what type of insurance is the best one for you, you will find this article useful. With a bit of research, you will eventually find the best option for you that will suit your needs perfectly. Universal life insurance is an excellent opportunity for people who want to get some benefits while they’re alive.