What is universal life insurance? Well how would you react if there is such a thing as an insurance protection plan that can help you make a substantial amount of cash? In this case, what you need to look for would be the variable universal life insurance policy since it gives you the option to have a combination of insurance protection with that comes with an investment opportunity.
The Variable Universal Life Insurance (An Overview)
When it comes to flexibility, this is the type of insurance policy that gives you the most. Soon after you made an initial payment, what comes next after that could be done at anytime you want and at any amount that you want. Nonetheless although you have a very flexible payment terms, you should know that they would still be subject to maximum and minimum amounts.
If time would come that you are not able to make payments, for as long as there is enough cash value hat can be used to settle your monthly insurance charges your policy would still be in effect.
You may opt to have your premiums invested to at least one or more investment portfolios that usually come with your plan offer, of course this would all depend on the kind and amount of risk you are willing to take. Most of these offered investment portfolios can make way for your long term growth usually with tax deferred profits. In addition to this, you can also get to enjoy a flexible tax free transfer coming from one of your portfolios to another.
The available choices haven’t stopped at this point yet, the reason being that you can also opt for death benefits. You can either choose to select a variable benefit or come up with your own level benefit that will not go beyond the original face amount that you have in your policy. The variable benefit that you will get is tantamount to the original policy face amount as well its corresponding account value.
The Advantages
Basically a variable universal policy offers 3 major benefits:
- 1. You have the liberty of choosing to decrease or increase the face amount that your policy comes with.
- 2. You can determine the time when to make your premium payments and the amount of payment that you would make.
- 3. Among the various kinds of investment portfolios that you can take, this is the kind of life insurance policy that offers the greatest potential to grow.
The Disadvantages
- 1. You may have to increase your premium payments in the event that you made a poor decision on your investment choices.
- 2. You run the risk of having your policy lapse on you in case that your investment choice did not perform well as you have anticipated it would be.
- 3. The kind of flexibility that it offers may render you prone to have problems when it comes to funding your policy. There is danger of losing your invested money together with your desired insurance coverage in such as way that you can skip making necessary payments which consequently will give you negative returns.
Due to the scale of the inherent risk that usually comes along with this kind of insurance program, it would not hurt and as a matter of fact it would to your best interest to seek the help of professional financial consultants prior to making any kind of decision venturing into whatever kind of financial investment. Additionally see to it that you give a thorough review of the given prospectus in its entirety. But after that if the question of “what is universal life insurance?” still lingers in your mind or if you still have the slightest of doubts, it may not really be a good move for you.
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