Do You Have a “Universal Life Policy?”


Which type of life insurance policy are you currently carrying? Is it a “term policy?” Is it a policy for the whole life or universal life? You could end up in serious trouble if you don’t know which type of policy you have. Everybody needs to know the type of policy they have, what it costs, and, most importantly, how long it will last. Too many times I’ve met people who don’t know the type of policy they have. How are you going to get this information? This information could make the difference between paying estate taxes and landing in poverty. It is important to understand.

This article will focus on the “universal Life” policy. It was a unique way to fund life insurance that is both whole and term. Flexible premium life, also known as “universal” or “flexible life”, allowed you to be flexible with your premiums. You could pay the same amount and keep the face amount, but the “cash bearing” aspect of the policy would change depending on how much money you contributed. If done properly, this policy can be an effective tool for insurance planning. However, it can also lead to disaster. I’ve seen it too many times.

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I was sitting across from a man who was just turning 70. He was looking at his universal life policy and was also about to turn 70. When we reached the section called “Schedule of Premiums” and “contract outlay”, it was clear that he had defaulted due to a lack of cash value and premiums. This man was 70 years old and his insurance policy was not good. If you don’t take a look at your policy, and understand what your policy covers and where your money is going, this can and will happen. It is not the best time to begin shopping for life insurance.

This is what happens when you are in a situation like this. It could and may have happened to you. You were sold a policy that was not adequately funded by the agent. This means that you aren’t paying enough premiums to maintain the policy’s life. An agent selling you a universal policy of life without a chart to show how the policy will last until 100 years old is a sign that you may have made a mistake. You could have been sold by an agent trying to sell you a policy quickly or because the premium was too expensive for your budget, so you chose the lower amount. This should never have happened.

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The monthly payment is split into two parts: one goes towards insurance, and the other goes to the cash account. The fact that insurance costs increase every year is something that is often not mentioned. It is less noticeable in the early years, but it becomes more apparent as you age. As the years pass, you still make the $50 per month payment. However, the policy costs $75. Where is the difference? You are correct if you answered cash account. Each month $25 is taken from the cash account. Every year, that amount will rise. The agent will not call you to tell you to raise your monthly premium. It is also known as under-funded. This means that you and your family will be paying a lot more than if you had insurance.

It is simple. This is why most states require an illustration. The agent should also show you the location of your policy through 100 years. A good agent will show you how your policy face has increased due to good funding. You will have peace of mind that your life insurance will continue to be in effect and you won’t be the one looking for life insurance after 70. My goal for every client is to have a universal policy so that they never have to pay another premium. Retirement is the right time to stop paying your bills and not increase them.

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