When to buy which life insurance? (A three-part series) Part 2
Today more than ever it seems like the product offerings in life insurance are never ending. It’s important for you to have a handle on the types of policies offered. Over the next few weeks we are going to briefly highlight the different types of life insurance and when each may be a good fit.
When to buy which life insurance?
We continue our education of life insurance policy types this week with a look at Universal Life Insurance. This is a type of permanent life insurance that takes any premiums you pay to the company above insurance costs and makes them available as cash value in the policy. Each one of these is unique and will have a cash surrender value tied to it for a number of years until fully vested. Besides just a straight Universal Life policy, you may also choose an Indexed Universal Life policy which is tied to the indexes. This policy allows you to allocate percentages of your premium to an index such as the S&P 500. Then, depending upon how the index performed, and how the company has the crediting set-up, you have the ability to gain larger amounts of interest than just the guaranteed rates. Each year, at your policy anniversary, this credit will be calculated and the interest will be credited to your account. The silver lining to this kind of policy is that you cannot go backwards if the market does not perform, you will have a guaranteed interest rate, and you may be able to fluctuate your payments if need be. Do keep in mind that these policies can and do lapse and can underperform if you decide to stop or reduce premiums and the cash value and credited interest are not covering all of the costs.
When to buy: Typically if you are on a tight budget Universal Life insurance (ULs) may not be the best option for you, but it’s important to note the value these policies have. They never expire and have the ability to gain cash value to which you can have access. Another great time to buy ULs is if you are currently looking to convert your term policy into something permanent. Finally, although we do not see often, it can be a good fit to insure babies and children. Not only do they have their whole life for this policy to grow, you also have paid up options so they do not have to pay on their policy forever.
Looking for a life insurance quote or have a question regarding your options or insurability? Contact us today for a local agent near you! Simply call 1-800-669-3959.