Where to Buy Top Universal Policies

For people with the foresight to recognize that their need for life insurance may be permanent and that their financial life will evolve through several different stages, a universal life policy is one of the best alternatives for life coverage.   Combining a low cost death benefit component with a tax-favored savings account, and flexible premium payments, universal life policies offer tremendous financial management opportunities for people with a long term planning horizon.

Their popularity as a life insurance alternative is such that there are now several hundred life insurance companies that offer one or more variations of universal policies.  The challenge for consumers, therefore, is trying to wade through the mounds of product information to determine where to buy top universal life policies.   The first step for someone who is considering a purchase is to be able to recognize what makes a top universal life policy.

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What Makes a Universal Life Policy Universal

Universal policies were created by life insurers as an antidote to the criticisms  that plagued the more rigid and more expensive whole life policies.  Essentially, the life insurer took all of the components of a  whole life policy – the guaranteed death benefit, the cash value account, the premium schedule, the credited interest rate – and unbundled it so that the policyholder could control the individual pieces on his own.  So, instead of the insurer controlling all aspects of the policy, the insured now controls the level of a lower cost death benefit, the amount of premium to pay, and access to the cash value. 

Features of Top Universal Life Policies

Flexible Death Benefit Options

The top universal life policies offer at least two death benefit options: Level and increasing.  The level option is where the amount of death benefit the insurer is obligated to pay is the original death benefit purchased.  The increasing option is where the amount of death benefit paid is equal to the original death benefit plus the accumulated cash value.  Where the latter offers more protection, it also requires a higher premium payment. 

Adjustable Premium Payments

The top policies provide the policyholder with the ability to adjust premium payments up or down. Universal life policies have a minimum premium requirement that is established to maintain a minimum guaranteed death benefit.  Should the policyholder be in a position to invest more than the minimum, then the excess amount goes to work inside the cash value account which earns interest. 

One of the planning options a policyholder could consider is to pay a higher premium in the early stage of the policy in order to accelerate cash value growth, and, then, after sufficient cash values have accumulated he can lower the premium payment.  If the values are sufficient enough to pay the minimum premium, payments can be stopped. 

Tax Favored Cash Value Account

All universal life policies are structured with an interest earning cash value account.  And, all enjoy the same favorable tax treatment.  The top policies pay a competitive current rate of return, much the same as what you could get from a short term bank CD.  There is also a minimum rate that is credited even if current rates fall below it. 

Cash Value Access

Top universal life policies have two ways in which to access cash values: Withdrawals and loans.  Unlike a whole life policy, universal life policies allow for cash value withdrawals. Some policies allow for as much as 20% of the accumulated value to be withdrawn  without charge in a given year.  There is limit to how much of the cash value account can be withdrawn so that enough remains in the account to support the minimum death benefit.

Cash values loans are also available and can be made at a low interest cost.  Because the policy also credits your borrowed cash value with a minimum interest rate which further lowers the net borrowing cost.

Additional Riders

Many policies offer additional riders that can fit in well with your lifestyle and financial planning needs. For instance, some policies offer a long-term care rider that will pay benefits to offset the cost of care should you require a nursing home stay in the future.  There are also wellness riders that can provide bonuses should you be able to meet prescribed lifestyle and health requirements. 

Shop the Top Life Insurers

For the most part, universal life policies are structured similarly from one life insurer to the next. While there are competitive differences among them, the key criterion for a top universal life policy is that it be issued by a life insurer that is financially strong enough to meet its obligations even in the worst of economic conditions.   With the competitive margin so slim between top life insurers and the rest, there is little reason to sacrifice peace-of-mind to try to gain a slightly lower premium or a nominally higher  interest rate.

The top  30 life insurers , as rated by A.M. Best (A, A+, A++), or Standard & Poor’s (A+,AA, AAA), offer all of the varieties of universal life policies that are available. So, it is just a matter of comparing the top features, straight across, between them.  You could narrow your search to the top 10 life insurers and still be able to find a highly competitive universal life policy.

Like any other policy, you can compare premium quotes based on a set death benefit amount to see which can provide the most insurance at the lowest cost. In addition, you can look for competitive interest rates, the highest minimum interest guarantees, the most favorable loan costs, the most liberal withdrawal provisions and  the availability of additional riders.  

Some plans offer greater premium adjustments than others and you can compare the cost of the increasing death benefit option. 

The best place to get comparison information is through an experienced, independent insurance broker who works with a number of the top life insurers.  They can help you run numbers based on a policy structure that best fits your financial situation.  It is also helpful to have a good working relationship with someone who can be of service to you when you need to make any adjustments to your universal life policy.

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