Universal Life Insurance Flashcards, test questions and answers
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What is Universal Life Insurance?
Universal life insurance is a type of permanent life insurance policy. It is a flexible and customizable policy that combines aspects of both term and whole life insurance policies. The flexibility of this type of policy allows the insured to adjust their premium payments, death benefit amounts, and cash values based on their individual needs and circumstances. Additionally, any excess premiums can be applied to the cash value component of the policy, which can then be used for various financial goals such as retirement income planning or estate planning strategies. The primary advantages associated with universal life insurance are its flexibility in managing premiums and death benefits as well as its ability to build up cash value over time. This cash value grows tax-deferred until it is withdrawn or used to pay premiums at some point in the future. Furthermore, universal life policies often provide an option for converting them into an annuity at retirement age, allowing you to receive guaranteed income payments throughout your retirement years. Another advantage associated with universal life policies is that they usually do not require substantial medical exams like other types of permanent life insurance do. However, depending on your age or health status when you purchase the policy, some insurers may still require at least a basic health exam or blood work before approving coverage under certain circumstances. In summary, universal life insurance offers several key advantages including: flexible premium payments; adjustable death benefits; tax-deferred growth on accumulated cash values; ability to convert into an annuity at retirement; and usually no need for extensive medical exams prior to approval for coverage.