Whole Life Insurance Florida

Posts Tagged ‘Whole Life policy’

Universal Life Insurance – Good Idea or Bad?

Is this a real option for people to provide protection for their families or not? We will provide you a little information here so you can decide for yourself it Universal Life Insurance is a good idea.

The original idea for Universal life may have been conceived in belief that it was a sound idea but it has not turned out to be that way. The plan was to provide Life Insurance coverage to a person for his life and pay a monthly premium that did not ever increase. This seemed like a good idea and makes a great selling point.

Let take a look at how the plan came together for Universal Life. It consists of a Whole Life policy that builds cash value which is a great idea. Whole Life it the best life insurance a person can buy. Because you can never lose money and the price never goes up and it does indeed build cash value that is your money that you can get while you are alive.

The second part of Universal Life consists of a Term Life Policy now here is where Universal goes downhill. The Term Life Policy included in the package is a one year term policy meaning that every year that it is renewed it is at the price charged for the policy holder at one year older. So you say but the Universal does not increase in price so how do they do it?

Remember the Whole Life portion that builds the cash value? This cash value is used to pay the extra cost that the term increases every year. This means that there will never be any cash for the policy holder to borrow against.

Check into rates for term life and see how much the price increases every year. Take a young person in their 20s the term life renewal ever year will eat up all the cash value of the Whole Life. So what happens then?

The cost increases begin to lower the amount of Life insurance to be paid out upon death. So what happens is in the short term the Universal Life is not bad. But for the long term a person may end up with very little or no life insurance.

Because of the Universal Life’s renewal every year it does make it a very good sale for the salesmen because every year you renew he gets a renewal with a pay increase.

So decide for yourself because to me the Universal Life Policy just does not make very good sense.