FAQs
Frequently Asked Questions
What is Universal Life Insurance, and how it works?
Universal Life Insurance is a flexible life insurance policy that combines a death benefit with cash value accumulations. It allows policyholders to adjust their premium payments and death benefit amounts, providing financial flexibility.
How does the cash value of Universal Life Insurance benefit me?
The cash value in Universal Life Insurance acts as a savings or investment account. It can grow over time, and policyholders can use it to pay premiums, increase the death benefit, or even withdraw funds for various financial needs.
Can I change my premium payments under a Universal Life Insurance plan?
Yes, Universal Life Insurance offers flexibility in premium payments. Policyholders can adjust their premium amounts and payment frequency within certain limits, allowing them to adapt to changing financial situations.
What is the difference between the death benefit and cash value in Universal Life Insurance?
The death benefit is the amount paid to beneficiaries upon the insured's death. The cash value, on the other hand, is the savings component that policyholders can access during their lifetime. Both components contribute to the overall value of the policy.
Can I access the cash value in my Universal Life Insurance for financial needs?
Policyholders can access cash value for various needs like retirement, education or unexpected expenses. Keep in mind that accessing the cash value may impact the death benefit.
Is Universal Life Insurance suitable for retirement planning?
Yes, Universal Life Insurance is often used in retirement planning. The cash value can be a tax-advantaged source of supplemental income during retirement, providing financial security in later years.
How is the interest credited to the cash value of Universal Life Insurance?
The interest credited to the cash value is based on the performance of the insurer's underlying investments. It is often tied to market indexes, providing the growth potential. Reviewing the policy details to understand how interest is calculated is important.
What happens if I miss a premium payment in my Universal Life Insurance plan?
If you miss a premium payment, it is generally deducted from the policy's cash value. However, it's important to understand the specific terms outlined in your policy regarding missed payments and their impact on the coverage.
How can I determine if Universal Life Insurance suits my financial goals?
Determining the suitability of Universal Life Insurance involves assessing your long-term financial goals, risk tolerance, and flexibility needs. Consulting with a knowledgeable insurance advisor or financial planner can help you tailor a plan that aligns with your unique circumstances.
Point 1: Tax-efficient savings vehicle
With the YRT component of the Universal life insurance Plan, you will always have a tax-efficient savings vehicle available in which you will be able to deposit any future cash inflows, such as inheritance.
Point 2: Inflation-beating estate protection
You don't have to worry about inflation devaluing your estate by choosing the increasing protection of the capital + fund option. The accumulation will, therefore, be added to the face amount upon death, which will also help to compensate for the growing tax bill that your heirs will face upon your death.
Point 3: Affordable life insurance coverage and a tax-sheltered savings account.
A part of your deposit is used to cover the cost of insurance and taxes. The remaining amount is invested in the investment options of your choice. The investments grow tax-sheltered.
