Universal Life Insurance Florida

Reader’s Question:

I have encountered a person mentioning about investing in variable life insurance. Then I have another friend who received a proposal for variable universal insurance. Are the two the same in Florida concerning life insurance?

Cheska

Gainsville, FL

I’m sure that you have also been approached by life insurance agents in Florida because your friends have been contacted too. Anyway, to answer your question, both variable life insurance and variable universal life insurance are permanent life insurance that has the life coverage and the cash value. Meaning, you are not only paying for life insurance, you are also investing for cash which accumulates over a period of time. These are the main similarities of the two life insurance products.

The variable life insurance has cash value which is invested in stocks, bonds and mutual fund for money market. This seems attractive in a sense that these investments grow quickly and in large amount. I know you’ll agree that stocks and bonds are good investment when it is performing well. However, there’s a risk that these investment may not work well thus posing risk to your money. Once the investment is a failure, you would decrease the face amount of your life insurance together with the failed investment. However, there are policies of variable life insurance that guarantees death benefit within minimum level.

Variable universal life insurance has the same characteristics as the variable life insurance. What makes it different is that it has the features of the universal life insurance in premium payment. Just like universal life insurance, the variable universal life insurance is flexible in premium payment because it is dependent on the prevailing market interest rate. Such flexibility in premium is the only difference with the variable life insurance.

Permanent Life Insurance Florida

Reader’s Question:

Hi, I have bought permanent life insurance here in Cape Coral for about ten years now. But at this point I can’t pay for the premium anymore because of an unexpected event in our family. What should I do with my insurance here in Cape Coral?

Claire

Cape Coral FL

Hi there Claire.

I appreciate your honesty and surely you will be rewarded with solutions to your crisis. With permanent life insurance, you will be faced with three options if you cannot pay for the premium anymore. First, you can opt to cash out the cash value of your policy. This way, you will be able to collect the accumulated cash. Once you do this, you will not longer be entitled for the life insurance coverage but at least you have taken out the cash savings. It is possible for you to pay taxes if the amount is over what you have paid in premiums.

Your second option is reduced paid up. This means that you can choose to stop paying while you let the cash value pay for the life insurance. Once this happens though, the death benefit may be reduced and there would be no more cash value.

You can opt to have it lapsed. However, you can save it in due time if there is provision in the policy that it can be reinstated after a period, usually after five years. Once you reinstate it at times when you are already ready to keep the life insurance “alive” again, you need to pass through another medical examination. However, the premiums are usually lower compared when you buy it as new life insurance.

You can talk to your life insurance agent to guide you with the best choice taking into account all the possibilities in your current and future condition.