Historical June 1984 report or notice. Original dates, prices and contacts describe the source period; current availability has not been established.
Universal life is not the name of an insurance company.
It is the most current and up-to-date way to buy life insurance. Universal life is a flexible-premium, lifetime insurance plan that is custom designed for each individual.
It is adjustable to meet your protection needs and savings goals of today and tomorrow.
It provides an ideal solution to many business and personal needs including retirement planning. Of the 1800 insurance companies, there are only a couple hundred now writing universal life.
In most cases, there is a minimum premium needed to cover the cost of insurance. Also there is usually a “front end load.” (The first $1,000 of cash is credited at 4%, then the current rate thereafter.) You can adjust your premium based on your personal needs and cash flow.
Each month your cash value is credited with the company’s current interest rate (after the first $1,000).
This rate reflects current economic conditions and prevailing market rates of interest.
The rates are lower than whole life because your cash value is earning that current interest rate.
This is balanced against your overall costs. Your policy can be increased or reshaped to fit your needs, so you will not need to take out new policies for added coverage.
This saves on policy fees. Your cash value is accessible to you in the form of either withdrawal (no interest to pay) or a loan (usually about 7% interest).
A withdrawal can reduce your insurance coverage and there may be a nominal administrative fee.
As a loan you, of course, pay interest, deduct interest payments, and continue to earn interest on your total cash value so your net cost is usually lower. Life insurance usually has two tax advantages.
The interest earned on cash value may be tax free, and this is especially important considering the high returns on universal life.
This is the advantage in retirement planning. Also the estate value is usually paid income tax free to your beneficiary.
By its very nature, universal life is perhaps the most tax efficient life product available.
Most plans offer waiver of premium and also other insured riders and children’s riders. Also most companies provide you with an annual statement of premiums received, expenses deducted, the cost of insurance protection, interest credited to your account, the interest rate used, and the current cash value and estate value.
It will also indicate any adjustments to your policy. I hope this has been helpful to you.
But you must be cautioned: This column does not offer tax or legal advice.
Because today’s tax laws are subject to interpretation and may change in the future, it is recommended that you seek counsel with a qualified attorney, account or tax advisor regarding life insurance taxation as it relates to your own situation.
Originally published in The Times of Skinker-DeBaliviere, June 1984.
Read this article in the original newspaper issue.
Original source: SD_Times1984_06.pdf, printed page(s) 10; PDF page(s) 10.
