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.

Reader’s Question:

I just got a new job and my mom’s been bugging me to get universal life insurance. Can you tell me, what is the difference between universal life insurance and whole life insurance, anyway? Is it the same as variable life insurance here in Bloomington?

Vanessa

Bloomington, IN

You have a very practical mom, Vanessa. Nevertheless, I think it’s good that you’re exploring all your options and not just looking at universal life insurance per se.

Now, to answer your questions. Whole life insurance and universal life insurance both provide permanent insurance coverage; however, whole life insurance involves a level premium which guarantees you a certain death benefit amount as well as cash values while universal life insurance policies involve more flexible premiums as well as potential for higher benefits. There are three basic types of universal life insurance – the interest-sensitive traditional fixed universal life insurance, the equity-indexed life insurance and the fully flexible variable universal life insurance.

Most universal life insurance companies in Indiana would probably be able to offer you both types of life insurance as well as any of the three types of universal life insurance. You must be careful, though, because different insurers would have different policy costs, terms and conditions. It is advisable that you shop around for a bit before you commit or sign a contract. I suggest that you request for free universal life insurance quotes online from insurers in Indiana. To do this, type in your zip code in the forms on this page. Compare and contrast so that you can get the best deal. I hope I was able to help clear up things a bit for you, Vanessa.

Reader’s Question:

What are equity-indexed universal life insurance policies? My friend from California mentioned it but I’m not sure if it’s being offered in San Antonio Texas – is it?

Sarah

San Antonio, TX

Hi there Sarah! Your friend seems to know quite a bit more than the usual about life insurance policies. I’m not exactly sure where I should start. Let me begin with the basics, though.

You see, universal life insurance is a form of permanent life insurance coverage. Permanent means that your policy will remain in effect until you either fail to pay your premiums or your life insurance policy pays out. It’s a flexible fund in that you can combine a variety of investment portfolios from the standard low-risk government bonds to the more high-risk funds traded in the stock market. Now, equity-indexed universal life insurance, or EIUL, refers to a variation of the fixed universal life insurance policy which was intended to provide a more secure investment option to the usually volatile stock market mix by crediting interest to the policy’s cash values based on the rise or fall of a chosen stock market index.

I’m not entirely sure whether companies in Texas specifically offer this type of universal life insurance; hence, I suggest that you enter your zip code to the forms on this site to find out. You can also get free quotes and access to information by clicking on the links.

Reader’s Question:

I have heard of the new life insurance product called the universal life insurance. What are the special features of universal life? Would it be available in Nebraska ?

Judith

Omaha, NE

Certainly, Judith, your insurer in Omaha will carry the universal life as part of the life insurance product line. Thank you for the question as it will give me an opportunity to explain the special features of the universal life insurance.

The closest life insurance to universal is whole life insurance. Both offer permanent protection, as well as tax-free cash values and competitive interest rates. Their biggest contrast is the payment of premium and in the calculation of death benefit. Whole life insurance is the more conventional kind of insurance where the owner pays a fixed monthly rate for a fixed death benefit package. Universal life is at the opposite end of the pole, in this case. Universal life lets the owner choose the amount and frequency of payments, just as long as the annual premium is completed. Consequently, coverage and death benefits can vary depending on your needs and cash value. You can also expand your coverage by paying a higher premium. Also, universal life can have several rider policies, dependent on your wishes. Ask your insurance company in Nebraska on the available riders that can be included in your universal life policy.

You can also try several combination’s or packages and get free quotes for them by entering your zip code on the space you find on this page. Universal life insurance will appeal to more daring investors, I guess. It has high risk components but with equally high yielding investments. Also, if you have an irregular income, universal life will be the ideal life insurance for you.