What Is Variable Universal Life Insurance?
Posted on Sunday, November 29, 2009
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Variable Universal Life Insurance
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Variable Universal Life Insurance policy is one of the policies offered in the Universal Life Insurance category. Like the other Universal Life Insurance policies, it offers flexibility of premiums and the ability to adjust the death benefit amount. The only difference to this policy is that the cash value amount is invested at the behest of the policyholder.
The policyholder is fully responsible for allocating the amount to the stock market as per his or her choice. Apart from this all gains and losses rely on the choice the policyholder has made. If the stock market collapses, the policyholder will have to bear the brunt of it, but if there is a windfall, the policyholder can reap its benefits too.
A policyholder is allowed to withdraw money against the cash value accumulation, in case of an emergency. This amount is tax-free as it is withdrawn from the death benefit account, but it must be remembered that a sufficient balance must be maintained in order to keep the basic insurance operational. This means that the cash value be preserved and the premiums continued.
This kind of a policy is suitable for those who have a lot of money to invest and if the market ups and downs do not bother them. Also it is best suited to those who have a good knowledge of how the stock market works, as there are too many risks involved in a Variable Universal Life Insurance Policy. A sudden dip in the stock market can ruin the way your investments stand.
Variable Universal Life Insurance is an expensive policy and therefore not the right choice for the average investor, as the death benefit can fluctuate with a fluctuation in the stock market. However a minimum death benefit will be paid to the beneficiary in the event of the death of the policyholder during a low market condition.
What Is Indexed Universal Life Insurance?
Posted on Sunday, November 8, 2009
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Indexed Universal Life Insurance
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There are different types of policies available in the market and you have to make a choice of a policy that suits your needs. With growing demands, you need to plan your future accordingly and hence it is important that you look for a policy that will give you the maximum returns at the end of the policy. There are various questions that you must consider before you decide to go for a policy, as all policies have different features and interest rates. Universal Life Insurance too offers different kinds of policies, such as the Fixed-Rate, the Indexed and the Variable life insurance policies.
Indexed Universal Life Insurance Policy allows the policyholder to put in a part of the premium amount into the stock market index as cash value growth while the other part goes into the death benefit account. The policy has the flexibility of the allocation of premiums, which is an ideal feature of Universal Life Insurance. The interest rate on this amount, which the policyholder allocates to the stock market index, does not generally collapse, as it is not directly invested into the stock market. However the rates have the potential to grow in a situation when the stock market is on the rise.
The Indexed Universal Life Insurance companies commonly set a cap, where the maximum rates that a policyholder can earn is between 4-12% of the cash value while the minimum is 0-1%. Popular Stock Market Indexes such as Nasdaq and S&P 500 are used to invest the cash value amount of the policyholder. Policyholders however, are not allowed to decide where they would like their money to be invested, the decision lies totally in the company’s hands. The Indexed Universal Life Insurance Policy is ideal for those who are interested in viable interest rates and have the kind of money to invest in it, as this can be a more expensive policy.
