Reader’s Question:

I am planning to buy my own life insurance here in Hillsboro, Oregon. What would be the benefits of getting a universal life insurance policy?

Lou

Hillsboro, OR

How are you today, Lou?

In short, a universal life policy is basically like merging a term life insurance policy with a tax-deferred interest accruing savings account.

One benefit of buying a universal life insurance policy is that you not only accumulate tax deferred savings, you also may not have to pay premiums throughout the entire policy’s duration. If money required to pay for the death benefit and other associated costs accrues in the savings fraction of the policy, eventually premiums may not be necessary to keep the policy in effect.

Since a universal life policy is an investment medium as well as a life insurance policy, predominantly those people would benefit from it who need life insurance into their 70’s. This would give enough time for the savings portion to collect into an investment. Most individuals will not require life insurance that late in their lives. In that case, it might be more favourable to acquire a term life insurance policy and prepare a suitable retirement investment savings account such as an annuity or a 401K.

If a universal life insurance policy seems right for you, there are a few points you may want to remember. First of all, ensure that you plan to have the policy for a long period of time given that you will need to have the policy in effect for at least fifteen years to qualify for any return from the policy. Second, make sure you have a well-informed insurance agent in Hillsboro, Oregon who can help you review your other alternatives such as whole life and term insurance.