Variable universal life insurance – is it right for you?
Variable universal life insurance is a type of life insurance where the policyholder can choose the investment options available under the policy. The investor can make investment decisions such as investing in stocks, bonds, money market instruments, real estate, etc.
This means that the policyholder can invest their own money within the policy and they will be the one who will benefit from the capital gains. Variable universal life insurance is a better choice than other conventional term insurance policies as the premium of this policy is lower compared to other term plans and it also provides a chance to make investments under the policy.
Here are the key advantages of this type of life insurance policy:
Advantages
Low premiums
The policyholders of variable universal life insurance policies can enjoy low premiums when compared to other term insurance policies. This means that the premium of variable universal life insurance is lower compared to the traditional term insurance policies. The rate of return on investment in this policy will determine the rate of premium.
Higher coverage
Another benefit of this policy is that it provides higher coverage. In fact, the benefits provided by this type of plan are similar to the insurance coverages offered by term insurance policies.
Cash value
One of the major advantage of this type of life insurance is that it gives the policyholder cash value. In fact, this cash value is calculated based on the returns of the investment options that the policyholder has chosen. So, if the returns are high then the cash value of the policy will also increase and vice versa.
Tax-free income
This policy has also become a favorite among tax-savvy people because it provides a tax-free income. If you are planning to buy a policy for your kids, you should definitely consider the option of this policy.
Disadvantages
Investments
As I said earlier, you can make investments inside the policy, but you will be at the risk of losing the money invested. In other words, the policyholder has no control over their investments.
No surrender value
The biggest disadvantage of this policy is that there is no surrender value. The surrender value of the term insurance policies is the amount that the policyholder can get when the insurance plan expires.
Variable Universal Life Insurance – The Best Option For You
The question about life insurance has always been one of the top-selling questions when it comes to any financial planning. The answers are all available, but not everyone knows which one is the right choice for him.
This is the reason why insurance companies and advisors are providing a number of options to their customers. People choose insurance based on their priorities, financial situation and budget. There are two major types of life insurance policies available for individuals: term and universal life. Each type of policy has its own pros and cons. However, they are both great tools that you can use to provide for yourself and family in the future.
also read this: Why Universal Life Insurance is the best financial planning for anyone who is self-employed or owns their own business: New tips 2022
What is the difference between universal and term life insurance policies?
If you are looking to save money and cover for your loved ones in the future, then you might want to consider buying a term life insurance policy. You can buy any term policy for as low as $10 a month. As the name suggests, it is meant to provide protection for a specific period of time, typically around five, ten or fifteen years.
The amount of coverage will depend on the policy you choose, as well as the age at which you buy it. For example, the younger you are, the cheaper the premium will be. On the other hand, you can buy a higher amount of coverage if you choose a policy that provides a longer period of time.
Conclusion:
In this article, I have shared with you the major advantages and disadvantages of the variable universal life insurance policy. You should make your decision based on these factors.
