The moment you decide to start a family life, your brain begins to plan for the future. It is natural for anyone of us to think and plan about the good life of our loved ones even when we are gone. This very moment is the point when you start to ponder over a life insurance policy. There are several insurance companies trying to attract you with various schemes and coverages but ultimately a long term plan comes down to deciding between universal life insurance or whole life insurance.
The decision actually depends over many things but the most influential is the financial condition and future prospects of the person getting insured. So, it will be much better to enrich yourself with the information about both of these long term policies and then decide according to your preferences and circumstances.
- Universal life insurance – This policy gives you a chance to take a loan on your accumulated cash benefits through the policy coverage but the insurance company decides the premium amount and the interest rate on your cash value.
- Whole life insurance – Here you have to pay a set amount of premium throughout the coverage period gets an individual cash value against it.
While your conditions would play a key role in deciding which policy you go for, still you should consider following points that may be helpful for you
Death benefits – You must think and decide how you want your death benefits to be and then discuss it with your insurance agent. You can opt for a set death amount or you can think of a combination of death benefits and cash value.
Flexibility – While universal life insurance policy is flexible in nature whereas a whole life policy is static, it ultimately comes down to you, which one you want to choose and why. Discuss your preferences thoroughly with your agent to decide the best.
Both of the policies have certain benefits over other and a few demerits to balance the equation. Following are some pros & cons of universal life insurance policy.
Lifelong coverage – As the name suggests, this policy gives you insurance till your last breath. This benefit in itself is enough to make your mind incline towards getting insured.
Loan – You can borrow your cash value as a loan in the difficult financial times and this is a great advantage.
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Tax – When you are covered under this policy your cash value is tax deferred and this can give you enough peace of mind.
Premium through your cash value – If you are stuck in some hard times then your premium can be paid from your accumulated cash value and you need not to worry about it.
Expensive – The universal life insurance policy is more expensive among the stated two.
Paying back – Once you take a loan on your policy it gets harder to pay back because of the interest set on it.
Conservative interest rate – If you think that you can simply pay for premiums and your policy will yield benefits then you must consider any other policy because here the value is decided by interest rates which are mostly conservative.
So, discuss your preferences with your insurance agent until all your doubts are cleared and then decide about the kind of policy you want to purchase to keep your beloved family smiling even when you are gone from the world.
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