Universal life insurance allows you to withdraw or borrow money against your policy at any time.
Universal life insurance is permanent, just like a whole life policy. A person will have coverage for the rest of their lives if they pay the premium. Like most permanent life insurance policies, universal life insurance integrates a savings component called a cash value with lifelong protection. When you pass, your beneficiaries will receive a lump sum of money called the death benefit. Here are some other features or benefits of universal life insurance.
You Can Withdraw or Borrow Money Against Your Universal Life Insurance
When you pay your premium, a portion of each payment goes toward the death benefit. Another piece builds up the policy’s cash value. Over time, as the money accumulates, you can withdraw or borrow against the policy’s cash value. The rules on how and when you can do this vary between policies. You should know that doing so will reduce your death benefit and may create a tax implication.
Flexible Premiums
Unlike other permanent plans, you can adjust your premium to fit your financial needs. When your cash flow has increased or decreased, and you’re on a tight budget, you can:
- Pay Higher Premiums When You Want
- Pay Fewer Premiums Less Often or Skip Payments
- Pay Out-of-Pocket Premiums or Use the Cash Value to pay the Premiums
However, paying the minimum premium or less will cause the policy not to build cash value. Additionally, only using the cash value to cover the premium will eventually make the plan run out of cash value and cause the policy to lapse.
Flexible Death Benefit
If you need more, you can increase the death life benefit. However, you’ll most likely need a life insurance medical exam to qualify for more coverage. If you want to decrease the death benefit, you’ll be able to do so after a few years of the policy being in place.
Potential Cash Value Growth
Money in cash value accounts earns interest based on the market rate on the insurer’s general account investments. You can earn more than you would with a whole life policy which has a flat rate.
Life insurance makes a difference for families, which is why you should offer it to your employees. Offering life insurance ensures your business stands out from the competition and makes it possible to recruit more employees. However, it also shows your current employees how much you care. Contact Malde Solutions today and allow us to walk you through our comprehensive policies.
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