Universal Life Insurance
essense Universal life is a combination of term
insurance protection with the cash savings value of whole
life. Interest rates paid on the cash value are typically
higher with Universal life than Whole life because they tend
to follow the markets. The contract is typically designed
with flexibility in mind.
can be paid in a lump sum, annually, or anywhere in between.
Interest on the cash value is usually guaranteed, but will
vary according to the investment performance. Each month deductions
are made from the cash value fund to support the costs of
the insurance protection. As long as the cash value is substantial
enough to maintain the monthly costs, the policy will remain
in force. Typically the death benefit reduces in proportion
to the increase in cash value, thus causing a level death
form of Universal life is Variable Universal Life. Variable
Universal life combines the growth potential of stocks with
a guaranteed death benefit. This type of policy allows premiums
to be paid, reduced, or skipped at any time, and the contract
will not lapse as long as sufficient cash value exists. The
cash value fund can be split between different investment
mediums such as stock, money market, and bond funds.
key to any form of Universal Life is that it's interest-sensitive
and allows for an adjustable death benefit.
Selecting a Quality Life Insurance Company
considering any life insurance plan it is important to investigate
the company offering coverage. Avoid companies without adequate
reserves to pay claims! Consider as a minimum standard that
the insurance company should have at least one of the top
3 ratings for financial strength, or claims paying ability.
Insurance company ratings including the ability to pay are
available from the following organizations:
life insurance companies pay dividends to policyholders after
they have owned a policy for a specific period of time. Policies
with participating stock insurance companies and mutual insurance
companies sometimes pay dividends if the company is profitable
and declares a dividend. Dividends are in no way and under
no circumstances guaranteed and are only one factor in determining
the potential value of a policy. The Internal Revenue Service
has considered dividends on life insurance policies to be
a return of excess premium and therefore not a taxable event
(Consult your tax Advisor).
what your grace period is and make certain that the insurance
company receives your premium on time. Coverage can be canceled
if premiums are not paid on time. It is possible reinstate
coverage if this occurs, but if you need it badly you will
most likely be denied.
for all options of paying your premium (monthly, Electronic
Funds Transfer, quarterly, semi, annual, and annual) in order
that you may evaluate your options carefully. Discounts are
generally given for EFT and annual modes of premium payment.
your policy carefully. Among typical exclusions are suicide,
death while in the commission of a felony and death that occurs
as a result of an act of war, but a few exceptions exist.