Universal life insurance is an option that you haven’t really given much thought to. You understand that there are some investment features, but you would like to learn a little more before purchasing. Take the time to read about the key features that define Illinois universal life insurance and make an informed decision when it comes time to decide which life insurance is best for you and your family.
What is Universal Life Insurance?
Universal life insurance is a type of whole life insurance that has an investment feature and is generally characterized by flexibility as it relates to premiums and coverage. Typically, any premium payments above the cost of insurance are credited to the cash value of your policy. Likewise, as insurance costs increase annually, money can be taken from the cash portion of the policy to pay for these increases. Universal life is popular because it guarantee’s a minimum interest rate on the policy’s accumulated cash value each year with higher interest rates paid when interest rates are high.
Universal life is known for its flexibility- a feature that many people appreciate. Having a significant cash value available allows you to skip a payment or pay a reduced amount when you are having temporary financial difficulty. Loans and cash withdrawals are also available, at least up to the amount of the cash value. Finally, there is flexibility in the face value of the policy as well giving you even more choices with regard to the amount of the death benefit.
What Exactly is Cash Value?
Universal life insurance accumulates what is known as a cash value from a percentage of your monthly premium. This cash value is the amount that will be refunded to you in the event that you decide to terminate coverage. There are several uses for a cash value accumulated as a result of your universal life insurance. You always have the option of not touching it and letting it build up within the policy. However, if you choose, you can borrow money against the cash value of your Illinois universal life insurance. You may also use it to pay premiums on the policy. Finally, you have the option of “cashing out” your policy by terminating the contract and receiving payment for the cash value.
Key Benefits of Illinois Universal Life Insurance
Probably the most stated reason for purchasing universal life insurance is the flexibility. Universal Life insurance gives you the flexibility to determine the specific amount of life insurance and premium payments that you would like to make. However, in most cases, there is usually a policy minimum that must be met.
The death benefit that comes from your universal life insurance policy and goes to your named beneficiary is tax free. In addition, under current federal income tax law, any growth in cash value of your universal insurance policy is tax-deferred.
One of the nicest features of a universal life insurance policy is access to the cash value. In addition to helping your family financially when you are gone, the cash value accumulated from your policy can be accessed while you are still alive and used to help pay for education, medical, retirement and a whole host of other personal expenses.
Universal life insurance is a terrific way to protect your family and loved ones with a permanent life insurance policy that gives you the flexibility to customize coverage and premiums to meet your needs. Illinois universal life insurance is a smart way to provide benefits while at the same time building tax-deferred cash value.