FITZGERALD INSURANCE AGENCY

 

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service@fitzgeraldinsurance.com


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What is Universal Life Insurance?


As with any kind of life insurance the purpose of Universal Life (UL) insurance is to protect your family. As mentioned above, it is a type of permanent life insurance. Much like a Whole Life insurance policy, Universal Life insurance has cash value that accrues in tax-deferred savings over time. The policies have a greater degree of flexibility than traditional Whole Life policies.

With a Universal Life insurance policy you have the ability to adjust the premiums and the benefit amount over the term of the policy. The premium amounts and death benefits are fixed with Whole Life. Unlike with Whole Life, where a portion of your monthly premium is placed in a single tax-deferred annuity account with a fixed interest rate at the time of the purchase of the policy, the savings portion of your premium in a UL policy is placed in a variety of bonds, mortgages and money market funds by the insurance company. Interest rates may vary, but never drop below a minimum, which is usually around 4%.


The flexibility of Universal Life offers cost saving opportunities for the life insurance buyer. For example you may choose two different types of death benefits in a UL policy. You can elect for the death benefit to only pay out what has been accumulated in the cash value of the policy, which costs less than electing a fixed death benefit plus the cash value. To determine the amount of Universal Life Insurance you require, use our benefits calculator.


One note about Universal Life - you can decide on your premium amount to fit your financial circumstances – but if you pay too low of an amount for too long, the policy could lapse, leaving your family unprotected. Always check with your insurance agent before lowering your premium.

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