Things to Know About Variable Universal Life Insurance

Variable universal life insurance is one of the policies that are not that popular especially with prospective plan holders who are not that keen with investing. This may be because it involves taking too much risk. In a nutshell, it is a type of insurance plan that secures the coverage of plan owner’s beneficiary by giving them a death benefit just like other insurance. However, it will also give the policy holder the opportunity to make more money by making investments. Therefore, the profit and loss depends solely on the shoulder of the plan owner. Below are other things that you need to know this type of plan.

Why is it called variable universal life insurance? –there are two things that single this type of plan out and its name indicates it. It is universal in the sense that you, the policy owner, can have the option of paying an unfixed premium; meaning, the amount due every month can differ within a range set by the carrier. At the same time, it is also variable as the cash value that it accrues can fluctuate depending on the performance of your preferred investments. It can double or you can lose all of it depending on the outcome of your decisions.

Benefits

• Flexible premiums –variable universal life rates may be way too higher compared with term life insurance quotes


but you can pay only a portion of it if you wish to do so. If your investments already have returns, you can use a percentage of it to pay for the remaining unpaid amount of your due premiums. If it will perform well, you may not even have to think of settling the payment at all.

• Money-spinning policy –one more advantage of such type of policy is that you can make money while still securing the coverage of your dependents. The cash value that your plan will accumulate can double or triple if your chosen investments will do well in the market. If luck is on your side, you can make relative amount of income from your plan. Your money will be working for you instead. Bear in mind that this is not a get-rich scheme though.

• Tax-free death benefit and income returns –as with any other type of insurance, the death benefit that your beneficiary will receive upon your demise is tax-free. But in the case of variable universal life plan, your income returns from your investments is also shielded from the tax so you can take home all your money.

Weak points

• Higher premiums –like life insurance no exam, this type of policy would also require higher premiums. Permanent life plans basically have higher payments compared with term life. However, variable universal may be even more expensive than whole life. This is because its face value can increase. In addition, a certain percentage of the premium is allotted to the investments you will be engaging in.

• Limited investments –another disadvantage of variable universal life is that there is limit in the investments that you can choose. Normally, your carrier will be pointing you to the ventures that are under their group of companies or their affiliates so that they will not lose the opportunity to make money through you.

Buying a universal life insurance policy

• Choose your carrier well. –since you will be working closely with your insurance company, you should take great caution in choosing one. It must be accredited by the concerned governing bodies and complies with the guidelines of regulating government agencies. Also, they need to be reputable and can be trusted that they are practicing good ethics. They must have good credit standings as well.

• Discern how much investment you should engage yourself into. –you should know which investments you should venture in and which you ought to avoid. You do not have to follow your insurance agent all the time. More investments would mean higher premiums not all investments do well and it does not necessarily mean that if one worked for other people, it would also work for you. Remember that since you are the plan holder, you will be the one paying everything.

• Ensure that your family’s coverage will not be overlooked. –before you thrust into any investments, make certain that the coverage of your family is already secure. The coverage and the premiums must be balanced at all times.

Next time you will look for term life insurance quotes, take a second to ponder if you think you can live up with the flexibility that variable universal life can provide and lots of risk-taking that it requires. For all you know, you can make relative money and make your family financially secure while you still live.

Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on cheap life insurance rates and online life insurance, visit his site today.