The Advantages of Universal Life Insurance
1. Premium Versatility
You are given the option to pay higher or lower premiums that will fit your financial situation.
Even if your finances are really excellent, you might want to opt for a lower premium when the market is not performing well and alter it when the market is on the rise. Universal life insurance allows the policy owner to modify their premium payments and this can be helpful depending on your circumstances.
2. Lifetime Coverage
As long as you keep up your payments, you will have coverage over your entire life.
Many people buy life insurance because they want to be covered for their entire lifetime. Term life insurance is great for short term protection, but it won’t provide lifetime coverage. Universal Life provides peace of mind knowing your loved ones will be taken care of no matter your age when you pass.
3. Options
The insurance company will give you several options to choose from for your interest strategy:
- Equity index strategy
- Guaranteed one-year term deposit
- General interest account based on the current rates
4. Cash Value
Should you experience financial difficulties, you do not have to cancel your policy in order to get your cash value. You can keep the policy and protect your family at the same time. You can borrow or withdraw funds that you have accumulated and keep the unused cash value to ensure the death benefits are still available.
5. Cash Value Freedom
Let’s say you normally pay $100 a month to your premium but you decide to pay $200 instead. $100 of that payment will go toward your life insurance costs while the other $100 will go into your cash value account.
The best strategy is to put as much as you can into your cash value and let it grow during the earlier years and later on have a lower premium or possibly have no premium to pay. If you are 25 and putting extra cash into your account, you will not have to pay on your premium when you are heading toward 80.
6. Tax-Deferred Money
Life insurance is great for tax purposes. The death benefit from your life insurance policy won’t be taxed except when your estate is above the state or federal estate tax limit.
Your cash value investment and death benefits are tax-deferred which means the IRS will not be involved when there is a payout. Keep in mind, if you borrow against your cash value you will have to take out a loan and incur interest. Also, if you become financially stuck and can’t make your premium payment, the company will pay it for you from your accumulated cash value.