Universal Life Policies

Universal life insurance is a unique type of coverage that offers many benefits to the holder. Generally speaking, this is known as permanent coverage that holds a cash value. Payments made to the insuring company in excess of the premium are added to the overall cash value. While some people do not want to add to the cash value this is a good idea because it earns interest every month. To go along with this, any unpaid premium amount or fees can also be deducted from the cash value.

How much interest can you earn each month with universal life insurance? This depends on the company you are dealing with. The insurance company is in charge of setting the rate. In many cases this will be attached to a particular index or bond. No matter what it is important for the policy holder to be aware of how they can collect interest and what it is based on.

There are many benefits of purchasing universal life insurance including the tax advantages. During the first few years of coverage the premium due is much more than the cost of insurance charges, also known as COI. The difference between the two numbers has the ability to grow free of taxes as long as the policy is kept in good standing. The reason for this is simple: the premium is being paid with dollars that have already been taxed.

As you can see, universal life insurance not only offers a death benefit but can also be a great savings vehicle as well.

Benefits of Universal Life

  • Flexibility
  • You decide how much life insurance you need -- and subject to certain requirements and limitations, you can adjust the death benefit and premium payments to fit your changing needs.

  • Security
  • You help protect your loved ones against possible financial hardship in the event of the insured's death.

  • Tax-Free death benefit
  • Under current tax laws governing individual life insurance, life insurance proceeds are generally income tax free to the beneficiary.

  • Tax-Deferred account value growth
  • Your policy's Account Value earns interest at the company's current interest rate -- federal income tax deferred. The current interest rate is guaranteed to be at least 4% a year

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