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Many people get baffled by the term whole life insurance quotes policy and universal life insurance policy. People confuse universal life insurance and whole life insurance as the same type of insurance policy. Candidly, speaking whole life insurance policy and universal life insurance policy differs a lot.
Meaning of Universal Life Insurance Policy
Universal Life Policy acts as a double edged sword, wherein it incorporates death benefit as well as it acts as a saving vehicle. It’s like combining term insurance policy with tax deferred interest.
One major benefit of universal life insurance policies is besides accumulating tax deferred savings; one may need not to pay life insurance policies along with a tax deferred interest accumulated in the savings account.
Who will benefit from Universal Policy?
Universal Life Insurance Policy is an insurance policy which is meant for people who have attained the age of 70 years and above. Most persons don’t need life insurance
policy at this age; it may be more advantageous to purchase term insurance policy. It is imperative to plan a proper retirement plan like 401K or annuity.
Before, purchasing a universal life insurance you need to remember following factors
Plan the policy for a long term since you will need to have a policy in force for at least fifteen years.
Secondly, don’t purchase universal life insurance policy from a shop nearby you. Consult some knowledgeable insurance agent who can weigh other options like term insurance and whole life insurance too.
Performance of Policy
Whole Life Insurance
The performance of policy depends upon several factors like mutual funds, bonds, etc.
Universal Life Insurance
It’s just like a term insurance policy, which expires after a stipulated time frame. You should never let your universal life insurance policy to lapse beyond a certain time frame, as you won’t be able to get yield or return.
Now that you have decided universal life is cheap life insurance as compared to whole life insurance. This policy has its own share of merits and demerits.
Cash Value destabilizes
The cash value of universal life insurance policy fluctuates depending upon the performance of insurance company investments. Inspite of that, there is some minimum amount that needs to be paid regardless of how poorly investment do. It might cause policy holders to raise their premium otherwise the insurance policy will lapse.
Commissions paid to broker
Universal Life Insurance policy is expensive policy but it is cheaper in comparison with other permanent policy. So, if you want to obtain cheap life insurance quotes, purchase this policy. The amount of commission that broker receives on universal life insurance is higher than other life insurance. In certain cases, it can be as high as a year’s premium. It indicates that universal life insurance is not a cheap option. Additionally, it indicates that brokers get incentives to push this type of insurance more as compared to other.
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