Life Insurance Blog

Universal Life Insurance Protection
January 7th, 2009
in Universal Life Insurance
Have you talked to your life insurance consultant about a Universal life insurance Policy?  A UL (Universal Life Insurance) contract is a unique type of coverage that offers many benefits to the policy holder. Generally speaking, this is known as permanent life coverage that holds a cash value. Premium payments made to the insuring company in excess of the premium are added into the overall cash value bucket. Many individuals do not want to add to the cash value this is a good idea because it earns interest every month. To go along with this, any unpaid premium amount or fees can also be deducted from the cash value.  Do you understand the tax implications with a Univesal Life Policy?
Many people shopping for life insurance struggle now that so many products are available in the marketplace.  Do you know how much interest can you earn each month with universal life insurance? This will vary on the company you are dealing with. The insurance company is in charge of setting the two types of rates. One will be your guaranteed interest rate.  This is put into force so you know that a minimum return is available for you.  The other rate in many cases this will be attached to a particular index or bond. No matter what it is important for the policy holder to be aware of how they can collect interest and what it is based on.
We have discussed briefly the benefits of a Universal Life Policy.  There are many other benefits of purchasing universal life insurance.  The tax advantage of using a permanent life insurance policy is huge.  During the first few years of coverage the premium due is much more than the cost of insurance charges, also known as COI. The difference between the two numbers has the ability to grow free of taxes as long as the policy is kept in good standing. The reason for this is simple: the premium is being paid with dollars that have already been taxed.
As you can see, universal life insurance not only offers a death benefit but can also be a great savings vehicle as well.  Understand that a Universal Life Insurance Policy is for the long term solution.  After on the plan for 15 or 20 years the insurance costs (death benefit) costs increases dramatically.  That is when you will see the cash value really building quickly. 

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