Universal life insurance is lower-cost, flexible, permanent life insurance that offers a savings element, which can be invested to build up cash value. As your life circumstances fluctuate, the premiums, savings component, and death benefits can be reviewed and changed. Our agent at Schmutter Strull Fleisch Inc. in New York, New York, can recommend a universal life insurance policy that works to protect your family and for your budget.
How Universal Life Insurance Works
Under the umbrella of permanent life insurance, universal life insurance provides more flexibility than whole life insurance. The insurance company breaks the premiums down into two categories: the cost of the insurance and the cash value, or savings component. As long as the cost of the insurance is covered to keep the policy in force, the premiums can be adjusted based on the policyholder’s needs over time.
Premiums over the minimum cost of the insurance accumulate as cash value. Those funds can be used to pay premiums. The policy is guaranteed for the entire term, as long as the minimum cost of the insurance is covered one way or another, through paid premiums or cash value.
The insurance company issuing the policy establishes an interest rate minimum. If the portfolio outperforms the minimum interest rate, excess earnings can be applied to the cash value. Policyholders can borrow against a portion of the cash value without affecting guaranteed death benefits and with no tax implications. Withdrawals can also be made but may incur tax liabilities.
Factors affecting the cost of universal life insurance include your age, health, weight, occupation, whether or not you smoke, and the policy itself. Our local agent at Schmutter Strull Fleisch Inc. can help you find the best value and coverage for your money.