Getting straight to the point, the universal insurance policy is quite an attractive package. Anyone would want a package that offers flexibility and choices. The owners of the policy are given the mandate to choose the kind of premiums they would want. In essence, the coverage can allow you to change with your changes in financial ability, without having to move to another kind of policy. The savings made through such a program is also an attraction, giving a policyholder a tax-deferred package that has very competitive interest rates.
How exactly does this work?
As you sign up for the universal life insurance policy, the insurer will deduct the expenses seen for administration purpose and other fees that the company might require. The cash that remains from these deductions will be used as the deposit, building into your cash value account. As usual, you will be required to deposit a certain amount of premium to keep your account active.
You amount then, without any tax deductions, will start to grow with the interest rate that the company has stipulated. Any amount that exceeds the expenses of the insurer and any other deductions made will simply be pulled into your account. Your monthly payments can grow to an amount that is so great, that you will have them pay up for your policy’s premiums if you wish. However, this will only happen if you are diligent to enough to have your premiums paid on time.
The biggest beneficiaries of the policy
1. Parents having young ones
If a parent decides to take up this policy, it would secure continual provision for the children, even if one or both of the parents pass away. This is especially the case if the parents are young and the children are also young.
2. The young
Anyone taking up this policy when he or she is young has the advantage of lower premiums. As with any other kind of policy, young people have a lower risk when it comes to life policies, and will therefore be subject to lower premiums. The good thing also is that these premiums are not bound to increase once age or health deterioration sets in.
3. Non smokers
The health status of a person will determine the overall premium rates you will be charged. If a person has a smoking habit, it increases chances of health risk, meaning that if you will get this kind of policy, you will have it with higher premiums.
If you have a convertible term insurance, your best bet it to take up this kind of policy permanently, as the advantages are cannot be doubted.