You may find yourself scratching your head at all the different types of life insurance available out there. From term to permanent, you may not be sure what is right for you. Universal Life Insurance is a type of permanent insurance, meaning you will receive protection for the rest of your life.
Frequently Asked Questions
What Is Universal Life Insurance?
Universal Life Insurance is a type of permanent insurance with an investing element.
Choosing a policy: You may select one that has a limited pay option, or you can choose a policy that allows you to pay until the age of 100.
Selecting a premium: Your policy will be debited each month by a COI charge (cost of insurance) in addition to any fees. Any additional premium that is not needed for COI or other fees can be invested into various investment options offered by your insurance company.
Can I pay additional premiums?
Yes – Many individuals choose to overpay on their monthly premiums to secure their Universal Life Insurance for the rest of their lives. This allows you to eventually own your insurance policy without having to continue paying premiums.
Can I invest my excess premiums?
Universal Life Insurance is very flexible. With a minimum COI, policyholders have the opportunity to overpay on their monthly premiums. Any additional payment can be invested into mutual fund options or index funds.
Are the investments for Universal Life Insurance taxed?
Because any investments in this type of policy are considered life insurance cash value and a return of premium, there is no annual taxation.
Can I access any funds that I have accumulated?
Yes - if your policy has been in place for an extended period of time and you need funds for an emergency, financial opportunity, or even retirement, you can access your accumulated funds.
Is Universal Life Insurance expensive?
The cost of Universal Life Insurance is generally more expensive than a limited-term policy. Because a limited-term policy is only in place for a period of time (i.e., 10 or 20 years), it can expire. A Universal Life Insurance policy is in place for your entire life, and you don’t need to worry about it expiring.
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