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Universal Life Insurance As An Investment? Universal life insurance is a type of permanent life insurance different than whole life. It offers the affordable coverage of term life insurance, but with the added benefit of investment opportunities. This is because universal life insurance policies have a savings option where you can accumulate cash value build up.
Universal life insurance policies are usually quite flexible. Your cash value builds up, death benefit, and premiums can be customized to suit you. Universal life insurance differs from whole life insurance because it allows the policyholder to access their cash value build up and use the interest to help pay for premiums.
More About Universal Life Insurance
One of the major benefits that universal life insurance has over whole life insurance is its versatility. Universal life insurance premiums are separated by the insurance company into two categories. The first category is the cost of insurance, while the second category is the cash value saving component.
Knowing the cost of insurance paid is to maintain coverage from the policy, the cash value portion of the payment is more flexible. The accumulation of funds from the cash value portion can pay missed premiums, rather than being used for further investment.
Cash Value And Universal Life Insurance
While whole life insurance and universal life insurance are both considered permanent coverage, they are different in the way that the cash value accumulates. With a universal life insurance policy, there is a guaranteed interest rate for each contract. This means that your cash value accumulation must meet a minimum interest rate.
If it doesn’t, then the insurance company will cover the difference. If the accumulation should exceed the minimum interest rate, the extra money overallotment goes into the cash value of the plan. Therefore, universal life insurance gives policyholders the potential to earn more than whole life insurance policyholders.
In the future, universal life insurance policyholders are free to take a portion of their cash value build up without it affecting the death benefit. These policy loans are nontaxable, making the deal even sweeter. However, taking out a loan that eventually not paid back, then the death benefit given to your family wont be the full face amount.
About Term Life Insurance
Unlike universal life insurance, term life insurance is temporary. This kind of life insurance will cover you for a predetermined amount of time. Choose terms from 10, 20, or 30 years in length.
Term life insurance differs in many ways from permanent life insurance. Term life insurance is usually more affordable. There is also no cash value build up with term life insurance, meaning you can not use term life insurance as an investment opportunity.
Although term life insurance plans are temporary, you can usually choose to renew your plan towards the end. In some cases, you may be able to transfer your policy to a permanent life insurance policy if you wish.
Term life insurance is also far more basic in their coverage. A term life insurance policyholder, coverage only lasts for the duration of their term. They only receive death benefit coverage, since there is no additional cash value build up.
How Can I Get The Most Affordable Rates On My Life Insurance?
Before applying for life insurance, we have a few suggestions for you. These tips can really help cut down the cost of your life insurance. Follow the tips below to make a better impression during your medical exam:
- Eat Healthy — Improving your diet can help you lose weight, lower your cholesterol, and make you a healthier person overall.
- Exercise Regularly — Maintaining solid physical condition can make a huge impact on your life insurance rates. Regular exercise improves heart health, bone health, and more.
- Quit Tobacco Products — People who smoke cigarettes usually pay 2-3 times more on their premiums than nonsmokers. If you quit smoking 12 months before you apply for life insurance, your rates will be 50% less than any time in the previous year.
- Compare Quotes — This is rule number one of finding life insurance. By comparing multiple insurance companies, you’re far more likely to see more affordable coverage.
Hiring an independent insurance agent can help you find the best and most affordable life insurance coverage. They’ll connect you with the top life insurance companies, and they’ll know which companies have the most lenient medical underwriting for you.
If you have any questions, please feel free to contact us at PinnacleQuote (855)380-3300.