What is Universal Life Insurance?

 

 

Universal life insurance is somewhat of a hybrid between term and whole life. It is very flexible, but it usually requires more management than other kinds of life insurance.

 

Universal life insurance policies are permanent, meaning you will have insurance coverage for as long as you pay the minimum premiums.

 

Premiums for universal life policies are determined by two different things: 1) the actual cost of insurance (COI) and, 2) the amount of extra premium, which is deposited into an investment side account.

 

Let's say for example, you purchase a $500,000 universal life policy. The actual cost of the policy (again for example purposes), might be $100 per month. This is the minimum premium. You can decide to deposit $200 per month instead, so the extra $100 will go into the investment side account.

 

Investment options vary depending on the insurance company, but the overall effect is that you can grow your cash value--like a whole life policy. Depending on the amount of premiums you pay and the number of years you deposit, your policy can be full self-supporting in 5,10, 15, or how many years you determine.

 

Investing in a universal life policy carries the same risk as investment in your mutual fund portfolio. Give us a call and we can show you how the tax-free growth within a universal life insurance policy can benefit you.

 

If you're a business owner, did you know that interest on your business investment portfolio is over 47%? Find out how you can reduce this to 0% with our Universal Life Strategy! Contact us now.