Universal life insurance (UL), one of two major types of permanent life insurance, is the other being whole life insurance. A universal policy provides lifetime protection as well as cash value and tax benefits. UL also allows for you to adjust or reduce your premiums, making it less expensive than full coverage. It also has fewer guarantees than whole-life because you can make a few small premium payments over a period of time, which could affect cash value growth and the amount of your death benefit.
It has a cash value that earns interest over time, just like permanent life insurance. You can borrow against the cash value to pay your premiums or use your coverage to cash your retirement income.
Guaranteed universal coverage (GUL) can also be known as no-lapse guarantee universal life insurance. It offers a guaranteed demise benefit and premiums which remain the same throughout the policy’s life. GUL policies can be purchased separately from permanent life insurance. But, GUL policies typically have an end date. Policies are typically purchased at an advanced age. This could be 95, 102 or more. The policy will remain in force until the end. GUL policies have a lower cash value than other permanent policies.
Universal life coverage is a powerful financial tool which can help to protect your family's future economic security for many decades. It gives you the freedom to create assets, handle life's uncertainties, or even pass wealth on to the next generation. Each policy is custom-made to fit the policyholder's financial strategy and personal needs. Premiums are flexible but a healthy 40-year old male should expect to pay about $8,000 per year for a $1,000,000 UL plan. You need guidance to find the right solution. You should discuss your situation with an experienced financial professional and insurance professional if you feel this type of insurance might be right for yourself. Coach B. has more than 30 years of experience in the business.
In order to see cash value increase, keep paying your premiums on the universal life policy. You will need to make either an upfront premium payment or a fixed monthly rate depending on which policy you choose.
Indexed universal coverage (IUL), allows you earn interest tied to index funds, such as the S&P 500. However your insurer might limit your rate. A fixed-rate account may allow you to earn all of your cash value or a portion.