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Universal Life Insurance

 

Universal Life Insurance

Universal Life Insurance is a permanent life insurance which gives the policy holder flexibility to customize the type, amount, and coverage available.
It was designed to be a combination of term insurance with a cash account that earns tax-deferred interest.

Within the terms of these policies, excess of premium payments above the current cost of insurance and expenses are credited to the cash value of the policy.

Advantages:

Options for index and direct market participation growth of policy cash value.
Options for term level riders to increase death benefit coverage for specific periods.
Options to build cash value.
Designed to offer flexibility when compared to traditional whole life.
Provides ability to adjust to changes in cash flow when funded properly.

Disadvantages:

Tax implications depending on individual circumstances.
Policy implosion can occur if the premium paid is insufficient to maintain policy.
Cash surrender charges.
May not have a guaranteed level premium depending on product.
Policy can lapse if cash value reaches zero.

Traditional or Non-Guaranteed Universal Life

  • Universal life is an “unbundled” product, which means that mortality expenses, interest rate, and other expenses are factored in to calculate premium rates and cash values.
  • This offers flexibility when making your premium payments, but it can also work against you if you do not pay the proper premium to keep the policy funded properly.
  • These products also are non-guaranteed which means that the coverage you pay for may not be available when you need it.
    • If you opt to borrow against cash value the policy may implode
    • If you are unable to pay policy premiums and have underfunded the policy it may lapse.
    • Upon lapse of the policy you may have an income tax liability exposure.

No Lapse Guaranteed Universal Life

  • No Lapse Guaranteed Universal life policy provides you with a premium that is guaranteed never to increase if premium is paid on time.
  • The death benefit will always be always in force subject to policy detail.
  • These polices functions as your life-long term policy or term life without expiration and with fixed premiums.
  • This product is ideal for those who are over 55 years old and looking for life insurance for the rest of life with minimum fixed premiums.
  • This policy can be used for estate tax liquidity, final expenses, or as a legacy for the next generation, or any other permanent life insurance need.

Fixed Indexed Universal Life Insurance

  • Indexed Universal life is a type of life insurance that builds a cash value.
  • These policies can be guaranteed or non guaranteed.
  • These policies also have the option to tie your return to a major stock market index like the S&P 500 or some other domestic/international stock market indices.
  • These policies receive Interest crediting that goes up and down in lockstep with the index.
  • The Non guaranteed equity indexed universal life policies have similar drawbacks to non-guaranteed universal life.
  • New guaranteed indexed universal life can be a better option as it provides an opportunity to earn better interest rate with few guarantees.
  • In all types of universal life – the no lapse guaranteed universal life policy is the best option if you are looking for permanent life insurance benefit with cash value growth.

Variable Universal Life Insurance

  • Variable Universal Life Insurance is a type of life insurance that builds a cash value.
  • The Variable Universal Life policy allows for, the accumulation of cash value which can be invested in a wide variety of separate accounts, similar to mutual funds, and the choice of which of the available separate accounts to use is entirely up to the contract owner.
  • The ‘variable’ component in the name refers to this ability to invest in separate accounts whose values vary—they vary because they are invested in stock and/or bond markets.
  • The ‘universal’ component in the name refers to the flexibility the owner has in making premium payments.
  • The premiums can vary from nothing in a given month up to maximums defined by the Internal Revenue Code for life insurance.
  • The value and performance of underlying accounts can create cash value buildup AND cash value destruction.

Orion Financial Services LLC, currently provides Fixed/Indexed,  No Lapse Guarantee, and Traditional Universal Life Insurance.

Contact us today so that we can review your options.