When it comes to protecting your family financially after you’re gone, it’s imperative that you have a comprehensive life insurance policy in place. However, because there are several types of life insurance you can buy, you might wonder which option is right for you and your loved ones. At Findinsurance.com, we make it easy to get the coverage you need by putting you in touch with universal life insurance companies. These providers can work with you to ensure your beneficiaries are financially cared for, while also enabling you to maintain a flexible plan that fits your budget.
What Is Universal Life Insurance?
The primary types of life insurance are whole and term. Term life insurance is when you set a period of coverage (i.e., 10 years) and pay premiums during that time. Once it expires, your policy goes with it. These plans are usually cheaper, but they don’t offer as much financial investment. Whole life insurance covers you for your entire life, but it can be pricier.
A universal life insurance policy is kind of a mix between the two. It allows you to customize your premium payments while still putting away money for the long term. Also, as the name implies, you have coverage forever, provided that you continue paying for it.
Cost of Insurance vs. Cash Value
You may be surprised to learn that you can use your policy as a means of investment. Universal life insurance companies will enable you to put away money on top of your premiums to accrue tax-free value for the life of the plan. This means that you can create a substantial nest egg if you start early.
With other plans, your premiums are fixed. With a universal life insurance policy, however, you can adjust your monthly premiums as you see fit. The cost is broken down into two sections: cost of insurance (COI) and cash value.
The COI is a minimum payment set forth by the universal life insurance companies. While the details and exact pricing can vary between providers, it usually covers expenses related to keeping your policy active. As long as you make minimum payments, your beneficiaries will get paid once you’re gone.
Cash value, on the other hand, is money that you put away for the long term. Thus, if you’re making good money for a while and can afford to pay more than the COI, it’s a good idea to invest as much as possible in your universal life insurance policy. Cash value is available with other plans (i.e., whole life insurance), but it works a little differently with this type of coverage.
Universal Life Insurance Cash Value
With other plans, the money you put away will accrue tax-free. On top of that, you can access the funds after a certain period, or pass them down to your beneficiaries after you’re gone. No matter what, though, the money is always yours.
With a universal life insurance policy, however, the primary benefit is that your money will accrue interest and you can take it out without affecting your death benefit. Typically speaking, universal life insurance companies will set a standard interest rate, as well as use the market to see which will grow your money faster. They may also implement a system of first-in-first-out (FIFO) or last-in-first-out (LIFO). The difference is how much interest the cash has accrued.
Upon your death, though, any remaining balance goes back to the company – it can’t be passed to your beneficiaries. They will only receive the death benefit of your policy.
Buy Universal Life Insurance Today
At Findinsurance.com, we make it easy to connect with top universal life insurance companies to provide financial stability and peace of mind to you and your loved ones. See if this plan is right for you.