What Is a Universal Life Insurance Policy?
Universal life Insurance is the form of permanent insurance whereby elasticity is most improved and investments on cash values made. Term life insurance is a policy that lasts for a certain period, normally a number of years while universal life insurance once it has been purchased lasts for as long as the policy holder is alive or as long as he stops paying for the policy.
Key features of universal life insurance:
- Cash value factor: Some of the received premium goes into a cash value which like its savings is tax favored.
- Soft premiums: They can also be short or long term, it depends with the client, in most cases it will rely on what one desires for.
- Death benefit: It helps you to make sure that your dependents are catered for after your death through a provision of a quick pay out.
- Loan options: it becomes possible to take a loan where the cash value of the policy will be used.
How it works:
How it works?
Universal life insurance works in the fashion that when one purchases the policy, he pays some proportion that goes into the face amount and the other proportion that goes to the account value.
Advantages:
- Flexibility: Therefore, premium and death benefits should be adjusted as and when need arises.
- Cash value: Form the part where tax-exempt growth will be maximized.
- Lifelong coverage: It enables a direct for a beneficiary where the policyholder dies during the lifetime of the policy.
Disadvantages:
- Complex: What the policy, or a part of it, intends to convey and its purpose may not be entirely clear and this may not be the intention.
- Fees and charges: Therefore, there is scope of various fees that affects with the policy across a range as necessary.
- Investment risk: Cash value is another where investment is moved and this has a fluctuating ROI.
Is universal life insurance right for you?
Universal life insurance is good for the individuals that require life insurance and also require the cash value subsidiary. However, one has to look at the prospect of up-front and long-term money-making objectives for that individual, and his or her appetite to risk that is other than the price of this policy. And hence, seeking advice from a financial consultant could help you in reaching an inference of whether you should opt for the universal life insurance policies or not.
Key Points to Get the Best Universal Life Insurance:
- Understanding Your Needs
- Assess your risk tolerance: Consider how much of your money should be invested relatively more securely, or more riskily.
- Evaluate your budget: premium is the cost one is willing and able to incur.
Comparing Policies. - Cash value growth: This means cross carrying of different interest rates as well as cross carrying of different investment products and offers from different insurers.
- Fees and charges: Out of the following possible charges which must be stated and which are listed in the policies, the following are policy fees, surrender charges and mortality charges.
- Death benefit options: Some possibilities of the alteration of the death benefit for the purpose of taking or giving some amount of exposure to the financial risk are discussed.
- Riders: Taking a moment to find out what other riders over riders that other people can be added to extent the coverage even further (for example long term care, disability income).
- Making an Informed Decision
- Seek professional advice: For further information about your special situation, please feel free to address any of the representatives of our firm.
- Read the policy carefully: The connection between the use of the product and the realization of its terms and conditions, the restricted and banned ways and means of using the product and the services.
- Review your policy regularly: Ensure that it can still get in a position wherein it can embrace the new needs that you have.
Claiming Universal Life Insurance:
The occurrence where there is stating and issuance of an ordinary life assurance policy is more often than not at the time of death of the assured.
- Notify the Insurance Company: A person should engage an insurer soon after the death of the individual that was being covered by insurance.
- Provide Necessary Documentation: Among the other document which one may be needed to produce includes; Death certificate, policy number and that of the beneficiary.
- Complete Claim Form: Any claim which a candidate in insurance wishes to present to an insurance company must be presented in the form of that insurance company.
- Submit Supporting Documents: Then tender other employment related documents as maybe deemed necessary such as medical reports or even an autopsy report if any.
- Follow Up: They should once in a while contact the claim with a view of knowing the next process which the insurance company is supposed to take.
Important Considerations:
- Policy Terms: Every policy holder should endeavor to do everything in his or her power to ensure that he or she takes his or her time to go through that policy in an effort to understand various claims procedures that are attached to that particular policy as well as the other conditions that relate to it.
- Timely Filing: They should also ensure that the processing of the claim should be affected soon in order not to delay.
- Beneficiary Designation: It is hereby declared and agreed that all information provided and submitted by the beneficiary is accurate and up to date.
- Professional Help: In the matters you consider to be complex, or those you fail to grasp as much, in anything related to estates, you should seek help from a lawyer or a financial planner.
Additional Notes:
- Cash Value: If at all the policy had cash component then the beneficiary would be in a position to decide on the amount of cash.
- Policy Loans: As would be expected cash value loans can affect either the face amount paid at death or face amount of the policy because of the fact that the loans may be outstanding on the cash value.
