Benefits Of Getting Universal Life Insurance Quotes
What is Universal Life Insurance?
Universal life insurance, also called whole life insurance, is a term life insurance policy. It's often recommended to people who don't want to have a lapse in coverage or who want the ability to withdraw from the cash value of the policy without impacting coverage. With a universal life insurance plan, for instance, you pay a set premium every month for your entire lifetime and when you die, your beneficiaries will receive the full death benefit (though some adjustments may be made for outstanding loans).
Universal life insurance is often recommended for people who:
• Do not need the death benefit in the short term
• Want to withdraw funds without impacting their coverage
• Have a long-term need for life insurance
In this post, I'll cover why you might want to consider universal life insurance and how to get a free quote. For more information on whole life vs. term, check out Greg's video explanation here . But if you're ready to get started, read on below. (To see what others have to say about it, check out these reviews from real customers.)
Universal Life Insurance and Whole Life Insurance Explained (Click To Expand) Universal Life Insurance vs. Whole Life Insurance
Universal life insurance is a "whole life" or permanent life insurance plan, which provides you with a constant stream of cash values after your death.
Whole life coverage will typically provide more benefits, better quality, and lower cost than term policies. In addition, whole life insurance has cash value that can be withdrawn without impacting coverage – something very important for people who want to protect their family's funds in the event of their death.
With universal life insurance, the cash value accumulates and builds over time – often double-digit returns simply for paying your premiums. It's a great way for young people to set aside money for college expenses or a down payment on a home or other life goals.
If you need life insurance coverage for a period of time, universal life insurance is the best choice. It can be a stepping stone to whole life – or you may find that it fits in nicely with your plans. Universal life insurance offers peace of mind and financial security in today's uncertain economy.
Perhaps most importantly, universal life insurance is an affordable option for every age group because it's always a fixed monthly payment. With that said, some universal life policies provide riders that can add to the cash value of the policy over time – making these policies even more valuable if you're young and eager to gain more protection versus leaving money on the table.
Universal Life Insurance vs. Whole Life Insurance Bonus
It's often true that term insurance offers a much lower rate than permanent insurance – but it's also true that term insurance premiums can increase substantially over time. With universal life insurance, you can be confident of receiving a fixed, low rate each month throughout your entire life.
But what if you want to borrow against the cash value in your insurance policy? Some policies will allow you to borrow up to 100% of the cash value (called the "face amount") with different riders attached – which is great if you're making extra money and need additional funds. However, all universal life policies have some form of authorized deposit plan (ADP) that allows you to withdraw funds without impacting coverage.
So, is universal life insurance better than whole life? Yes, definitely. The money you accumulate inside of your universal policy can buy much more than just a term policy, and you need to think about what type of coverage you want for the various situations in your life.
Universal Life Insurance vs. Term Life Insurance
There are two types of whole life insurance plans: permanent and term. Permanent life insurance was the first type of whole life insurance policy that was designed and implemented by banks back in the 1950's. It continues to be used today alongside term policies and other variations, such as universal life. However, we'll focus on permanent life insurance here to make it easier to compare the two types.
Term life insurance is a form of permanent or whole life (whole) coverage that has a temporary or limited benefit available at a reduced cost for a select period of time – often six or twelve months with a one-time premium payment.
Permanent life insurance provides a stream of benefits that accumulate interest, usually at a higher rate than you would receive with universal life. In return for higher premiums and a temporary benefit, permanent life insurance policies provide guaranteed death benefits.
Universal life insurance provides a fixed, monthly payment throughout your lifetime. If your policy has no term limit, it will continue until you die – and the cash value will "pass through" to your beneficiaries in the event of your death.
With universal life, the cash value continues to increase over time and at some point may reach or surpass the value of the entire death benefit provided by your policy. It's important to note that this point varies from one policy to another and is often around age 85 or 90.
How Long Should You Keep Universal Life Insurance?
What many people don't realize about permanent insurance is that it's designed to be permanent. As long as you keep paying your premiums (and you remember to advise the company if you move) the insurance company can't cancel your policy, won't cash out your cash value, and can't even increase your rates – no matter how old or young you are.
Of course, there will be tax consequences if you use your policy's "cash value" to pay for medical expenses or buy something with it (it's not considered a "qualified" withdrawal), but it makes sense if you see these policies as another way to responsibly invest for a longer time period in the future.
Universal Life vs. Term Insurance
When you compare term life insurance with universal life, the differences are clear. Term insurance is designed to be temporary and provide a limited number of cash values – typically six months or less and at a premium cost that can increase greatly during that time.
With term insurance, you face an annual premium cost between $100 to $300 (with some companies charging as much as $1600 per year). As of March 2010, the average annual rate was around 9.75% – although rates vary greatly depending on your specific needs.
Conclusion
There's always a lot of confusion between whole life and universal life insurance. Whichever one you choose is dependent on your needs, interests, and budget. However, there are many options available today – including whole life plans that work well for many people.
As we mentioned above, it depends greatly on how you want to use your policy when it comes to long-term or short-term protection. If you're young and have plenty of money to invest but don't need protection against the loss of all those funds – choose term insurance with a low premium price.