Universal Life Insurance: Protection
that can pay while you are still living.
A newspaper article that circulated via the Associated Press a short time ago displayed the headline, “Americans Woefully Underinsured.” Since there are hundreds if not thousands of insurance companies, and since most major companies do offer life insurance on the job—inadequate though that is—it is surprising that 40% of American adults have no life insurance at all.
The journalist suggested that the problem in purchasing a life insurance policy may be first of all a simple lack of education. Many people who have insurance have only term or a group policy simply because they can understand that when you die, the insurance pays the beneficiary. Many people—and even agents themselves—often lack a good understanding of universal life insurance, an option much more suited to the average American family.
The feature article presented additional statistics. “Two of every three males between the ages of 18 and 24 have no life insurance while one in every three females is in the same boat. Why are young people so tragically ignorant of the need for this important coverage?
In addition to a lack of a defined understanding, many younger people simply consider life insurance unimportant. After all, death is something that happens to “the other person.” Unfortunately, that attitude is very naïve, but hopefully, you won’t need be one of people having to face that dilemma; thus, it would be nice to have life insurance protection that will pay you back rather than being nothing more than a death benefit.
What is Universal Life, and How Can it Meet Your Need?
Universal life insurance is a type of protection that will benefit your loved ones if you should die, but will also give you some additional assets for your mid-life to senior years. You can click on our Universal life Link for a Universal Life Insurance Guide, but we can give you a basic understanding here.
A universal life, or UL, as it is often called, is a life insurance policy with a savings plan. This is different from a Whole Life policy that simply builds a cash value. The savings—or accumulation account—in a UL is a separate fund from the insurance side. Your premium accumulates interest is this account. From this account—not directly from your premium—the company draws enough each month to pay the cost of insurance and fees. If you fund the accumulation side properly, the accumulation will not only stay ahead of the cost of insurance, but may even reach a sum sufficient to pay the COI and still continue growing—with no further premium from you. It usually takes about 20 to 25 years—depending on your age—for the account to get to that point. However, the cash accumulation is exactly that—real savings that you could pull from in an emergency or that you could use in later years to convert to an annuity or to a single premium paid up insurance. Some companies even allow you a penalty free annual withdrawal from your savings. You just need to be aware that you jmust leave enough in the account to fund the insurance side at least as long as you need the insurance. If you withdraw too much, you may have to increase your premium to keep the insurance itself in force.
Universal Life policies are very inexpensive if they are purchased when you are young. Although they will be more than a Term policy, they will usually be less than a Whole Life, and they have benefits that a whole life policy does not have. There is really no reason to go one more day without insurance. Don’t be a statistic. Use our online service to find the
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