The King of Cash Value Life Insurance –
While many people may realize that there is a difference between term and permanent life insurance, few may know what actually separates one type of cash value policy from another. They also don’t know which type of policy offers the best life insurance with cash value?
However, knowing which policy to choose can make a substantial difference in not only your life insurance planning but also with regard to other key financial benchmarks, including:
- Retirement income
- Payoff of debt
- Overall future lifestyle
For instance, even though whole life and universal life insurance both provide permanent life insurance with cash value as a death benefit component to the policyholder, these plans are significantly different in many ways.
With universal life insurance, the policyholder can actually “adjust” the death benefit (within limits), without the need to purchase a new, separate policy. This can help in reducing the cost, as well as simplifying the process of changing the policy holder’s coverage.
What Makes Universal Life the best Cash Value Policy?
What can really make universal life (UL) insurance so flexible and versatile is the fact that because the premium can be geared to pay for only the cost of insurance in the death benefit component, the remainder can fall into the cash value – allowing that portion of the policy to grow exponentially as compared to a whole life insurance plan. You can also add an enhanced liquidity rider to have immediate cash value accumulation to borrow against.
Because of this, universal life insurance can be used in a variety of different financial planning situations, such as:
- Mortgage Payoff – By accessing the cash value via a surrender or a policy loan, a universal life insurance policyholder can pay off large debts such as their mortgage while he or she is still living.
- Supplement to Retirement Income – Likewise, the non-taxable nature of universal life insurance policy loans has also been used as a source of supplemental retirement income for those who may need more than what they’re receiving from their pension and/or Social Security.
Why Consider Universal Life?
There are a number of reasons why a universal life policy may be a better alternative when considering cash value life insurance options, such as:
- Flexibility – Universal life insurance is flexible. With this type of coverage, the policyholder may, within certain limits, decide when to pay the premium, as well as how much of that premium to put towards the death benefit and how much to put into its cash value.
- Tax Advantages – Because the cash value in a universal life insurance policy can grow on a tax-deferred basis, it means that the gain on these funds will not be taxed until the time of withdrawal – and this means that over time, the cash can grow significantly without being subject to taxation.
- Guarantees – Universal life is more flexible than its whole life alternative, and these plans will also offer certain guarantees such as a minimum rate of interest.
- Get immediate cash value with enhanced riders.
An index universal life insurance policy is another way to supercharge your cash value growth. You can learn in detail about IUL policy options here. No matter what we can help you find the best cash value policy.
Hopefully, after reading this you have a good understanding of what cash value life insurance is and how it can help. The next step is to get illustrations to see how this type of policy can help you.