Universal life
insurance is much more involved than term life, and with that comes more
expense. There are some parts of the universal life policy that make it
attractive, and that's the reason it is the largest selling type of
life insurance.
upon the death of the insured, universal provides something to the insured, too. While the premiums are rather expensive, a part of those premiums go into the till as value to the insurance policy. After some years of paying into the universal life policy, the cash value accumulates to a handsome amount.
Features of Universal Life Insurance
Premiums pay for the maintenance of the life policy, which includes the costs to insure as well as any fees to the insurance agent. Monies left over are invested as chosen by the insurer and paid into the cash value fund.
When the cash value gets to be large enough, the insured can allow it to pay the premiums and maintain itself. It is also seen as an asset for the insured and can be used as such for procuring a loan. The insured may borrow from the cash value and not have to repay the loan, only the interest on the loan due to the loss of revenue to the insurance company.
Funds from the cash value can be used for pension funding, taxes, split dollar agreements, collateral assignments, and other purposes. When money is taken out under IRS guidelines, it has tax-free status.
Objections to Universal Life Insurance
One of the prime objections to universal life is that agents who sell these policies often receive commissions equal to the first year of premiums paid. This provides an ulterior motive for making the sale.
The Federal government has made it illegal for insurance companies to offer universal life as an investment to potential policyholders. Agents do present it as a tax-advantaged vehicle, for which it does
upon the death of the insured, universal provides something to the insured, too. While the premiums are rather expensive, a part of those premiums go into the till as value to the insurance policy. After some years of paying into the universal life policy, the cash value accumulates to a handsome amount.
Features of Universal Life Insurance
Premiums pay for the maintenance of the life policy, which includes the costs to insure as well as any fees to the insurance agent. Monies left over are invested as chosen by the insurer and paid into the cash value fund.
When the cash value gets to be large enough, the insured can allow it to pay the premiums and maintain itself. It is also seen as an asset for the insured and can be used as such for procuring a loan. The insured may borrow from the cash value and not have to repay the loan, only the interest on the loan due to the loss of revenue to the insurance company.
Funds from the cash value can be used for pension funding, taxes, split dollar agreements, collateral assignments, and other purposes. When money is taken out under IRS guidelines, it has tax-free status.
Objections to Universal Life Insurance
One of the prime objections to universal life is that agents who sell these policies often receive commissions equal to the first year of premiums paid. This provides an ulterior motive for making the sale.
The Federal government has made it illegal for insurance companies to offer universal life as an investment to potential policyholders. Agents do present it as a tax-advantaged vehicle, for which it does
No comments:
Post a Comment