|Benefits Of Universal Life Insurance
Universal life insurance is a permanent insurance based on premium payments. The money left after the premium payment is deposited as cash value to which the interest is added and it is debited each month along with some insurance charges.
The universal life insurance policy holders enjoy the following benefits.
The universal life insurance is exempted from federal taxes and hence you save the amount paid for taxes.
This type of life insurance has a premium which needs to be paid every month or will lead to the lapsing of the insurance. Hence it automatically creates long term savings for future use.
The withdrawals are tax free and the amount is deducted from the cash value of the policy without any sales charges. However, this would affect the long term benefits of the insurance and the final returns would not be as high as expected.
The loans are sanctioned taking the insurance amount into account. The sanctioned loan amount would be charged an interest amount that needs to be repaid to the insurance company. If the interest is not repaid, the pending amount would be subtracted from the cash value of the policy.
If the cash value of the policy is less than the interest amount to be paid back, the insurance policy lapses. However, loans taken on the insurance policy reduce the long-term feasibility of not just the insurance, but also the associated death benefits. If the insurer dies, the balance dues will be deducted from the accumulated amount and returned to the beneficiary.
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