Here are the top best What type of life insurance incorporates flexible premiums voted by readers and compiled and edited by our team, let’s find out
Everyone today wants some sort of life insurance to protect their financial needs, and that’s actually a smart move. Many life insurance companies offer some level of benefits for their customers so that they get the best set of policies.
Whole life insurance policies have a guaranteed death benefit along with a cash value account that grows because of interest. While the death benefit is only given to beneficiaries upon the death of the policyholder, the cash value can be used while the insured is still alive. Whole life insurance policies have a relatively higher rate of premiums because they offer lifetime protection.
Term life policies on the other hand are valid for a specific term; 10-30 years, and offer only a death benefit. These are mainly used by people who want to provide financial protection to their families after they die, and the premiums are also low and affordable for many policyholders.
Along these policies, there is a type of life insurance policy that incorporates flexible premiums and an adjustable death benefit, and this has worked for many people over the years.
Universal Life Insurance Policy! Let’s get into detail and see what this is and how it works.
Universal Life Insurance
Like said above, universal life insurance policy has flexible premiums and adjustable death benefits, this means that the policyholder is free to have an adjustable amount of coverage along with premiums that they can manage overtime. Of course, a minimum amount of premiums is still required to be paid to keep the policy alive.
A universal life policy has two components: COI and saving component.
COI: This is the Cost of Insurance, which requires the minimum amount of premiums to be paid. This cost covers administration charges of the policy, mortality rates etc. This amount varies on the type of policy the insured wants and their age too.
Saving component: Also known as the cash value component, this is accumulated over time due to interests and may also increase the COI. This investment portion of the policy depends heavily on the stability of the market, if the money is invested in a low performing market, all of it can go to waste.
Adjustable Life Insurance
An adjustable life insurance allows policyholders to make changes with their policy such as adjust their death benefit, face value coverage, premiums etc. Within certain limits and regulations of the policy, the insured person can choose to change the policy according to their needs.
People opt for this type of policy because of the leverage it provides. According to changing needs of people, they may want different levels of coverage. For instance, when you purchased the policy you might need low coverage, but now you have a family who needs more coverage. So this way you can adjust the face value of the policy according to your needs.
There is no difference between adjustable life and universal life insurance because universal life insurance is also called adjustable life insurance because of its flexible nature.
Rates of Universal Life Insurance
Here is a breakdown of the average cost of universal life insurance by age. These rates are of healthy individuals- male and female- for a guaranteed $1 million universal life policy.
Age Male Female 30 $3,943 $3,539 35 $4,741 $4,246 40 $5,956 $5,262 45 $7,026 $6,128 50 $9,035 $7,891 55 $11,368 $9,769 60 $14,647 $12,660
Note: Sample rates have been extracted online, courtesy of Forbes Advisor.
Best Universal Life Insurance Companies 2020
Shopping for a universal life insurance policy can be really tough and time consuming. There are so many companies that exist today and have expertise in customizing policies according to their customer’s needs. On this note, we have a list of best universal life insurance companies compiled.
- Prudential: Best Overall
- State Farm: Best Instant Issue
- Transamerica: Best Value
- Northwestern Mutual: Best Whole Life
- New York Life: Best Term Policies
- Mutual of Omaha: Best for No Medical Exams
- USAA: Best for Military
All you have to do is head on to their website and see what they have to offer. Make sure to tell them exactly what you require and they will help you out in the best way that they can.
Can I cash in a Flexible Premium Adjustable Life Insurance Policy?
An adjustable life insurance policy has an accumulated cash value component which tends to grow over time. While the policyholder is still alive, they can borrow it or withdraw all or some portion of the cash value to use for major expenses like sending a kid off to college or downpayment of a house.
It is true that the best time to cash in your universal life insurance policy is after 15 years of the policy being in force because that is when a good amount is accumulated to use. This money can be used to pay off all premiums too so you don’t have to worry about them anymore.
Looking for a life insurance policy can be exhausting, especially when you’ve been hit with a policy that doesn’t entirely match your needs. For this, having an insurance company curate a policy specifically for you is very important. And what’s better is the nature of flexibility that the policy itself offers.
This kind of adjustment is allowed in a universal life insurance policy where people have the liberty to choose between the rate of premiums, amount of coverage, investment options etc. If you’re also looking for a policy that resonates with you, your best pick is universal life insurance!