Speaking of Universal Life Insurance…
What are the disadvantages of this type of insurance?
Universal life insurance is generally much more expensive in comparison to term life insurance options. While some of these added costs are going to be going into your account in the form of a cash value component, the rates that you are going to be earning on that money may not necessarily be netting you the best possible rates of interest. This is the reason why so many financial professionals end up recommending that you buy term life insurance and simply invest whatever difference there is. What this is going to do is to allow you to purchase the death benefit insurance that you need while still having an added layer of flexibility that you can use in order to invest the difference in any way, shape or form that you choose.
Variable Universal Life Insurance
This particular type of life insurance is actually quite similar in nature to universal life insurance but there is one serious difference that you are going to need to consider. With this particular type of insurance policy you are not going to be earning a specific interest rate when it comes to a cash value fund. Rather, you are going to be investing this portion into one or several of a variety of different vehicles of investment. You are going to be able to choose from a wide variety of different investment vehicles including mutual funds for example. What this actually means is that you are going to be given a much greater level of control of your money because you will be able to choose where you put it.
What are the advantages of this type of insurance?
You are still going to be guaranteed the minimum level of death benefit, provided that you are keeping up with the minimum monthly or yearly premium amounts. You are also going to be given the flexibility associated with being able to invest the insurance premium's cash value portion in nearly any way that you like. If you end up making wise investment decisions in the process, then you are going to find yourself being able to take advantage of a significant level of tax deferred earnings on the investments that you make.
What are the disadvantages of this type of insurance?
First and foremost, when you are being given the chance to potentially invest a part of your policy into investments that could potentially be risky, you could end up losing a lot of money if the market ends up turning south. If you experience a significant drop in the value of your insurance account, you could actually be putting your insurance policy in jeopardy.
Photo Credits: Leonid Mamchenkov
Related Posts -
Customizing a Budget It is a good idea for you to put together your own unique budget work sheet when it comes to getting started in setting up a budget for your household. Make sure that the categories and the information that you use to plug in your budget information pertains to your...... -
Present Value and Future Value - Understanding the Difference In macroeconomics, two important financial structures are the present value and future value. Below is a discussion describing the two structures, and how they differ from one another. Present versus future value is analogous to the concept that today's dollar will be worth more in the future. This concept is...... -
Comparing Life Insurance Policies pt 2 Continued from part one. What are the advantages of this type of insurance? Term life insurance policies tend to be a lot less expensive in comparison to other types of insurances, including whole life insurance, universal life insurance and variable life insurance for example. Term life insurance also typically has...... -
Choosing the Right Types of Investments pt 2 If company stock is the only option that is available to you through your company's offered 401 k savings plan, then you should be looking at other types of investment vehicles to handle some of your savings for retirement. Annuities When you decide to buy an annuity, what you have...... -
What Are Passive Streams of Income? If you’re trying to make more money, chances are you’ve heard the phrase, multiple income streams. However, there are two main types of income streams that you can use, and they are quite different. The first is known as active – and as the name implies, this is a type......
Related Websites -
The Benefits of Antiques Insurance If you have a collection of antiques, collectibles or fine art, then you may find yourself wondering about insurance coverage, and how antiques insurance can possibly be used to cover your needs and ensure that your cherished items are protected. In general, antiques insurance is tricky because placing a value...... -
Let's talk life insurance One of the most important decisions that needs to be made when evaluating your financial plan is the amount and types of insurance you currently have and how much more you need. At a minimum you absolutely must have health, disability and life insurance. Most states require auto insurance so...... - Term, Whole And Variable Life Insurance. Which Type Of Life Insurance Should I Buy? This is a guest post by Joe from JoeTaxpayer.com. Stop by his site and subscribe to his feed for more great articles! Insurance. Even saying this word makes some people cringe. For the most part, you are familiar, and perhaps used to, the insurance you have on your car, house,......
-
¤How Much Life Insurance Should You Have?¤ When Should You Consider Getting Life Insurance? /caption] If you have dependents that need financial support if you pass away, then you should get life insurance. Even if you are a stay at home parent, you should consider purchasing life insurance. Life insurance should not be considered an investment. How...... -
Types of Insurance Most People Need It's trite, it's contrived, and like so many sayings, it just so happens to be true: 'stuff' happens. The more, uh, explicit form of this saying has a colorful term used to describe this 'stuff', and to label it as universally bad. Sadly, too much of the time it seems......
Categories:
insurance
Tags:
0 comments ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment