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.
Universal Life Insurance in Tennessee
Reader’s Question:
I understand that universal life insurance would be relatively an expensive type of insurance in Memphis, TN. Would there exist a cheap universal life insurance considering that it has a flexible premium? With flexible payment, it means the premium fluctuates so it can be considered neither cheap nor expensive.
Tanya
Memphis, TN
Good question, Tanya
It’s an interesting question because you argue that having a flexible rate, the price cannot be determined if it is high or low compared to others type of life insurance. That seemed to be a wise observation.
To answer your question, universal life insurance is actually more expensive than the term life insurance. But when you compare it to other types of permanent life insurance that’s available in Memphis TN, we cannot conclude that it is cheaper than others just because it is simply flexible. Although the premium is flexible, the flexibility is only based on the foregoing interest rate in the investment side.
But universal life insurance is not just investment, it also has insurance. When you are unhealthy, for instance, the price of the insurance is higher. The combination of high life insurance and investment makes up an expensive premium. Meaning, there is still a required premium to pay to keep the universal life insurance in force. It is not purely flexible to the sense of your capability to pay. Another advantage of universal life insurance is you can borrow the accumulated amount to pay the premiums at the right time and amount. This way it is not hard for you to pay.
If you are simply concerned of the flexibility side, it is not about your capability to pay per se. It is about the interest rate to accumulate the tax-deferred investment side of the universal life insurance. Other than this, you can still find options to pay cheaper premiums for universal life insurance. In conclusion, universal life insurance is not cheap when compared to other life insurance available in Memphis Tennessee because this has investment side. It is flexible only on the investment side but you are still obliged to pay the life insurance side which actually has fixed base premium to pay.
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