Are Universal Variable Life Insurance Plans A Good Deal?
Universal variable life insurance has been heavily touted by the insurance industry for some time. The question is are Universal life insurance plans a good deal for people like you and me?
Let's start with the basics. What is a universal variable life insurance plan? It is a type of life insurance that is very flexible and which builds up a cash value on a tax free basis. At its most basic, you contribute to the plan in one of a variety of ways. Part of the contribution is then used to pay the policy applicable to the death benefit, but the rest builds up as cash that can be invested as detailed by the life insurance agreement.
So, are universal variable life insurance plans a good deal? Absolutely. In fact, they are perhaps the best deal in the life insurance arena. They have a ton of positives and only a few negatives. Let's take a look at both.
One of the big positives of the policy is the flexibility of contributions. Simply put, you can set things up to be tailored to your financial situation. The most popular approach is to put a lump sum in on occasion. As long as there is enough money in the policy, you can miss future payments and still have the policy be valid. Depending on the policy, you can contribute monthly, quarterly, yearly or every few years. The flexibility is tremendous.
The second big benefit is the cash value. The money you contribute to the policy will partially be paid to secure the death benefit, but much of it will simply build up as cash value. The beauty of this is you can then invest the money in accounts similar to mutual funds and actually grow it. Making things even better is the fact this money will grow tax free since it is within the policy. How do you get the money out? Well, you can take distributions and pay taxes on the gains or your can simply take loans against the policy. Again, this creates tremendous flexibility for policy owners.
Are there any negatives to the policy? Yes. The primary one is this is not a cheap policy. You are not going to be paying premiums of a hundred bucks a month. The universal variable life insurance policy is intended to be a big boys financial tool, so you are going to be looking at significant premium payments. You can design different approaches, but you should expect to pay tens or hundreds of thousands of dollars. Make sure to find out what is available with the policy you are looking at.
Are universal variable life insurance plans a good deal? Yes! In fact, they are probably the best plans on the market.