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Universal life insurance is much more involved than term life, and with that comes more expense. There are some parts of the universal life policy that make it attractive, and that's the reason it is the largest selling type of life insurance. While term life insurance offers only a benefit to the surviving beneficiaries upon the death of the insured, universal provides something to the insured, too. While the premiums are rather expensive, a part of those premiums go into the till as value to the insurance policy. After some years of paying into the universal life policy, the cash value accumulates to a handsome amount. Features of Universal Life Insurance Premiums pay for the maintenance of the life policy, which includes the costs to insure as well as any fees to the insurance agent. Monies left over are invested as chosen by the insurer and paid into the cash value fund. When the cash value gets to be large enough, the insured can allow it to pay the premiums and maintain itself. It is also seen as an asset for the insured and can be used as such for procuring a loan. The insured may borrow from the cash value and not have to repay the loan, only the interest on the loan due to the loss of revenue to the insurance company. Funds from the cash value can be used for pension funding, taxes, split dollar agreements, collateral assignments, and other purposes. When money is taken out under IRS guidelines, it has tax-free status. Objections to Universal Life Insurance One of the prime objections to universal life is that agents who sell these policies often receive commissions equal to the first year of premiums paid. This provides an ulterior motive for making the sale. The Federal government has made it illegal for life insurance companies to offer universal life as an investment to potential policyholders. Agents do present it as a tax-advantaged vehicle, for which it does qualify. Investment professionals often complain that the returns are very small for the amount of funds that are outlaid. Term Life Weakness The biggest fault of term life insurance is that once a term ends, there is no guarantee that the formerly insured can get affordable life coverage if it is needed because of age and health issues. This can be especially true for those who have a 30-year term policy. The advantage of a low premium does little good for the person who does not invest anything during the term of the policy. My Insurance Expert will help you find term life insurance that fits all of your individual needs. The world of life insurance doesn't have to be difficult. With the right advisor you can give your family the protection they need and have peace of mind.
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