Thursday, August 27, 2009

Update August 27-2009 All About Universal Life Insurance By Insurance Experts

Unlike term and whole life insurances, this policy blends term insurance and an investment account into one contract. Also its premiums can be increased or decreased, paid when due or at unscheduled dates, or stopped entirely and restarted at the owner's will provided the policy value is adequate to maintain the cost of the insurance.
This type of policy is adapted well to satisfy the changing insurance and investment needs of its owner.
(By Kyle J. Norton)

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What is Variable Universal Life Insurance?
By Elizabeth Newberry Platinum Quality Author

Variable universal life insurance is a type of permanent life insurance. Like regular universal life insurance, it’s much more flexible than whole life insurance. At the same time, it allows you to save tax-deferred interest.

In the name, “variable” refers to the policyholder’s ability to invest the accumulated cash value in a number of accounts. Like all permanent life insurance, variable universal life insurance builds cash value. The policyholder can choose among a wide variety of accounts in which to invest the cash value. “Universal” refers to the policyholder’s flexibility when it comes to making insurance payments. Of course, this flexibility is often based on the policy’s current accumulated cash value. In any event, variably universal life insurance differs from whole life insurance here because whole life insurance policies have a fixed premium. No flexibility.

There are a few ways in which a person can use a variable universal life insurance policy. First, and most obvious, is as a life insurance policy. The policyholder’s beneficiaries will receive death benefits upon the death of the policyholder. Too, a variable universal life insurance policy can be used as an investment tool. The policy’s cash value earns tax-deferred interest, which generically means the policyholder can save and save and save without having his or her savings taxed.

Another way to use a variable universal life insurance policy is to protect money from being taxed, and not just the money you’re investing. This option is used mostly by wealthy individuals who want to avoid the estate tax. These people will give large sums of money to their children, who have their own variable universal life insurance plans, and the money is covered under a gift tax exemption.

Aside from financial protection and tax advantages, variable universal life insurance policies are also beneficial for educational, retirement, and estate planning and saving. With so many options, variable universal life insurance is beneficial to all age groups.

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