What is the most common reason to buy a universal life insurance policy? (2024)

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What is the most common reason to buy a universal life insurance policy?

A universal life insurance policy might be a good choice if you want: The flexibility to adjust your premiums and coverage amounts** Cash value that you may be able to borrow from while you're still alive. Permanent* life insurance protection and access to cash values.

What is the best description of a universal life insurance policy?

Universal life insurance is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums and fulfill any other requirements of their policy to maintain coverage.

What is the primary reason for buying life insurance?

Why is life insurance important? Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.

What is universal life insurance quizlet?

Universal life insurance is a type of permanent life insurance designed to provide lifetime coverage.

Which is the best reason to buy life insurance quizlet?

The only reason a person would buy life insurance is to eliminate or substantially reduce the financial consequences of that person's death by providing income to his or her dependents.

What is an advantage of universal life insurance that attracts many people to this financial product?

It's the flexibility of universal life insurance that attracts many people to this type of policy. Universal life insurance provides flexibility in your premium payments, flexibility in the use of any cash value within the policy, and ultimately, flexibility in the death benefit.

What must be disclosed in a universal life policy?

Policy Forms Must Clearly Describe the Type of Coverage

A universal life or interest sensitive life policy form is considered misleading when there is not clear and prominent disclosure of surrender charges, front-end and back-end loads, fees and expenses.

What is the disadvantage of universal life insurance?

The only payment your family will get is the death benefit amount. Plus, if you ever withdraw some of the cash value, you will subtract that same amount from your death benefit amount. Some disadvantages of getting universal life insurance include higher premiums, surrender fees, lapse potential and uncertain returns.

Can I withdraw money from my universal life insurance policy?

If you have a permanent life insurance policy that has accumulated cash value, then yes, you can take cash out before your death.

Which of the following motivates most purchases of life insurance?

Here are five of the most common reasons why people buy life insurance.
  • Financially Take Care of Dependents. The people who will benefit from your life insurance benefits are your dependents. ...
  • Substitute Lost Income After Death. ...
  • Cover Funeral Expenses and Outstanding Debts. ...
  • Pay Ongoing Living Expenses. ...
  • Protect Other Assets.

What is the primary purpose of life insurance quizlet?

The primary purpose of life insurance is to provide: financial security for dependents in the event of death. Insurance companies use actuarial data to measure: the risk of loss for a given population.

What type of insurance would you consider the most important and why?

#1: Health Insurance

Health insurance is a critical piece of every financial plan. An unforeseen diagnosis or a major accident can leave you with a six or seven-figure medical bill. That kind of financial hit could wipe your retirement savings and more.

What is universal life insurance in simple words?

Universal life insurance is a type of permanent life insurance coverage, offering both a death benefit and a cash value component. The policy will remain in effect for the lifetime of the insured individual, as long as the premiums are paid on time.

What makes universal life insurance different?

Universal life insurance is more flexible.

Universal life offers more control, but it requires oversight and doesn't have a guaranteed death benefit. You can adjust your policy, and even your premiums (within limits), as your life changes.

Which of the following is the key characteristic of universal life insurance?

Flexibility is a fundamental characteristic of universal life insurance.

What type of life insurance has no cash value?

Term life insurance

It is sometimes called “pure life insurance” because, unlike whole life insurance, there's no cash value to the policy. It's designed solely to give your beneficiaries a payout if you die during the term. Most individual term policies have level premiums, so you pay the same amount every month.

What is the most important life insurance?

If budgeting is your biggest concern, term life insurance may be the best choice. If you have many dependents, whole life insurance may be a better route. However, if financial planning and cash value are most important to you, universal life insurance may be a strong option.

When life insurance doesn't make sense?

Reasons not to buy life insurance can include not having beneficiaries, not having beneficiaries who need financial support in the event of your death, or not having enough cash flow to pay for premiums.

How the rich get richer using life insurance?

How can you use life insurance to build wealth? Term life insurance can be used to build wealth across generations by providing a payout to your surviving loved ones. The death benefit can be used to pay estate tax, as well as preserve remaining assets.

How to make money with universal life insurance?

With an indexed universal life (IUL) insurance policy, your cash value growth is tied to a stock market index, like the S&P 500. If the index performs well, your policy's cash value can grow at a higher rate. However, if the index performs poorly, your policy's cash value may not grow at all.

What happens to cash value in universal life policy at death?

When the policyholder dies, their beneficiaries receive the death benefit, in lieu of any remaining cash value.

What can the owner see in a universal life policy?

The Universal Life policy is also more transparent than a Whole Life policy, in that policyholders can see exactly how the various policy elements (premiums, death benefit, mortality charges, interest, and expenses) interact.

Which is better whole life or universal life?

Choosing between them can come down to specific features, like how the cash value component works and how much flexibility you want. Generally, whole life is simpler and more predictable, and universal life allows for more flexibility throughout the duration of your policy.

Does universal life insurance have a guaranteed death benefit?

As long as you meet the premium payments and payment schedule you chose at purchase, a guaranteed universal life insurance policy offers a death benefit and premium payments that will not change over time.

Does Suze Orman like universal life insurance?

Suze has a true dislike for whole life and IUL insurance. We agree that whole life insurance and indexed universal life is not for everyone. Most of our clients need a lot of life insurance at the cheapest price that they can get it.


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