Recommended Universal Life Insurance Policies
Reader’s Question:
I’ve heard a lot about how much coverage one should have under a life insurance policy (my neighbors here in Minnesota just loves to talk about these things!), How much universal life insurance, in essence, would you recommend?
Lee
Minneapolis, MN
This is a very good question. Everyone who wishes to have life insurance coverage should know how to recognize how much life insurance would be adequate for their needs. Many experts say you have to get a coverage amount that is ten, twenty, thirty times your annual income as a good rule of thumb. While this may be a good estimates, you can never really be sure if these are enough or in the other hand, this may be too much and you might end up wasting too much money on life insurance that could have been put to good use elsewhere. Where do you even begin?
It would be highly advisable that you get a good understanding of your family, your household, your kids (anyone who relies on you there in Minnesota, financially) needs. On an annual basis, try to determine how much you spend on bills, groceries, mortgage, loans, debts and any other financial obligations that you may have. You will now have a way of more precisely identifying how much money your beneficiaries would need in order to survive decently in the event that you pass away.
Let’s say you do pass away, how much money or income do you want to leave your beneficiaries? For how long? Also, who will take care of burial costs? Let these questions guide you in determining the right kind of life insurance policy for you with the right amount of coverage.
Universal Life Insurance Rates
Reader’s Question:
What are the benefits that I can get from universal life insurance policy aside from the flexibility in the amount applied to life insurance policy?
Janice
Fort Collins, CO
A universal life insurance policy is a term life insurance policy that has element of savings. If you are a policy holder of a universal life insurance policy, you can adjust the amount of premium applied to the life insurance protection and savings anytime. Reducing the amount can be easy but if you want to increase your life insurance, the life insurance company may require you a proof of insurability.
Owning a universal life insurance policy has several advantages. With this type of life insurance policy, the death benefits are level or do not increase. The proceeds are paid upon the death of the policyholder and are free from income tax. Universal life insurance allows the policy owner to increase or decrease the amount of saving. Increasing the amount of life insurance requires the policyholder to present an evidence of insurability. Because of the saving element, this life insurance policy accumulates cash values tax deferred. The policy owner can access this cash in case of an emergency. Lastly, an increase in cash value increases the face amount or death benefit accordingly.
There are also disadvantages when you purchase a universal life insurance policy. The premium of this type of life insurance is a little high but the extra premium is worth it if you want to save money. In the event of a decline in interest rate, the amount of premium may be required to increase. Otherwise, the policy may lapse. The policy holder can actually reduce the amount of the amount of his/her life insurance as an alternative to this situation.
An Essential Guide To Universal Life Insurance
Readers Question:
What are the benefits of a Universal Life insurance policy? Will I have to spend much on such a plan?
Shirley
Des Moines, IA
Good question. Let’s define Universal Life insurance first: this is a special kind of Whole life or Permanent life insurance coverage that allows a policyholder more flexibility when it comes to adjusting how much you pay for premiums, and even your death benefits. It has the savings or cash value feature of a whole life insurance policy as well. The benefits of such a life insurance plan include:
1. More options when it comes to pay-outs after the maturity of the policy – you may choose to have either the cash value as the death benefit, making premiums lower, or the face value amount of the policy.
2. A Guaranteed minimum interest rate stipulated on the policy – your cash value is sure to grow at a set rate, regardless of the insurer’s financial performance.
3. Tax-deferred accumulation of wealth – There are only certain instances where state and federal taxes can apply.
4. Your money is placed in a diversified range of investments – reducing the risk of loss in case a particular investment goes south.
Similar to any type of permanent life insurance policy, when you buy universal life insurance coverage your initial premiums can be very expensive, this is because you’re building up your cash value, and like most permanent life insurance plans, premiums become cheaper in the long run.
However, it is still highly recommended that you shop around for the most competitive policies before you even decide to buy life insurance coverage. The Internet is a great place to start; with many life insurance portals and websites giving access to the latest rates and offers, making it possible to effectively identify the providers that is most affordable to you.
Do maintain a healthy lifestyle and seriously consider quitting smoking. Smoking alone and push rate up by as much as three to four times above the average. Hazardous activities or hobbies also tend to make life cover more costly; so if you intend to keep premiums affordable, then reduce your risk of dying sooner.
Universal Life Insurance Company
Reader’s Question:
If I die, what can my family expect to receive from my universal life insurance policy when they file a claim here in Westminster Colorado CO?
Paul
Westminster Colorado CO
Your family is lucky to have someone like you who cares a lot about them, Liam. Your family should be informed that universal life insurance claims in Colorado and most places in the US are usually handled by the home office of the life insurance company. They will need to inform the company and fill out a request form. Leave them a copy of your insurance policy so that they don’t have a hard time filing the claim.
Normally, insurers are required to pay beneficiaries at least eight percent interest starting from the date of death so it is in their best interest to settle their claim immediately. Your beneficiaries will receive the amount specified in your universal life insurance policy, though the insurer may sometimes adjust this amount depending on specific provisions in your life insurance coverage, like if you have any outstanding loans against the cash value of your policy or if you have accrued dividends which can be added to the amount of the benefit.
Your family also has the option to either receive the bulk amount immediately, leave the proceeds with the company and let it earn interest until they are ready to claim it or convert the proceeds into monthly income, sort of like pension for them in your absence.
Why don’t you take a look at the different options available from insurance companies. Just type in your zip code to receive free universal life insurance policy quotes. This will give you a better idea of what kinds of benefits your family can receive from universal life insurance policy before you finally decide to purchase it.
About Universal Life Insurance
Reader’s Question:
Why should I go with a Universal Life Insurance Plan? Are they better than the whole life policy that I currently have here in North Carolina?
Enrico
Charlotte, NC
Universal Life Insurance Plans are a type of whole life or permanent life insurance coverage that is geared more towards individuals who are investment-oriented and would like to have more control of how your money is invested. Universal Life Insurance policies also reflect the kind of risk tolerance that you would have when investing.
So a Universal Insurance plan can also be seen as a life insurance policy with a sort of mutual fund attached to it. The goal is to grow your money or the Cash-Value amount of your policy in the long-term (and while the policy is still in force). Admittedly, this kind of policy is not for everyone and it would be a good idea to have some basic knowledge about how investment portfolios work.
The only real difference between a traditional whole life plan and a universal life insurance plan is that you are given control over how your money grows. If you are somewhat of a risk-taker, even a conservative one and recognize that you can make money (a lot of it) by investing and also wants the capability of choosing what kind of investment mechanisms your money should be going into, then a Universal Life Insurance Plan might be for you.
This kind of policy has a lot of promise, but like anything there will always be some amount of risk involved so consult a life insurance agent or broker there in North Carolina, and ask as much questions as you feel necessary to understand this kind of coverage.
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