Consider the risk you are willing to take when purchasing universal life insurance. Do not believe in any promises of enormous investment returns that may not be true. Make sure you examine all parts of the policy illustration, not just the projections.
If you're considering a universal insurance policy, be aware of the risks involved. Do not fall for the promises of big investment returns. It is important to look beyond the projections and see the actual policy illustration.
Think about the level of risk that you are willing or able to accept when considering universal life insurance policies. Don't fall for promises of substantial investment gains that might not materialize. Don't just focus on the projections, but also the guaranteed parts of the policy illustration.
In other words, the cash value component earns an interest rate based on either a money rate of interest, or for certain universal policies, a rate linked with a market indicator. You can increase your cash value by making any changes that will make it easier to pay your premium. You can reduce your monthly payments if your financial situation has changed.
Universal life insurance can be described as a permanent type of insurance. A universal life policy covers the insured for their entire life, provided they pay their premiums and comply with any other conditions. Universal life insurance, like many permanent policies, combines a savings component ("cash value"") and lifelong protection. The policy's death benefit will be paid to your beneficiaries upon death.
Guaranteed universal life insurance (GUL) is also called no-lapse guaranteed universal life insurance, this type of policy offers a guaranteed death benefit and premiums that stay the same for the policy's life. Though often included under the permanent life insurance umbrella, GUL policies usually have an end date selected at the purchase time. Policyholders typically choose an advanced age – 95, 102, etc. – and the policy will remain active until that point. Unlike other permanent life policies, a GUL policy may have little or no cash value.
As long as you keep the cash in your policy, your funds can continue to experience tax-free income growth. If investments fail, the accumulated capital value might decrease. You'll still have to pay taxes for any withdrawals, and your death benefits may decrease. You can keep the majority or all of your accumulated money value if your policy is terminated.