An adjustable universal life insurance policy provides both a death benefit and an savings component called cash value. The cash value earns interest at rates dictated by the insurer. The policyholder may accumulate significant cash value over the years and, in some circumstances, “borrow” the appreciated funds without paying taxes on the borrowed gains (taxes may be required if policy is surrendered). As long as the policy stays in force the borrowed funds do not need to be repaid, but interest may be charged to your cash value account. Premiums are adjustable by the policyowner.
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Other types of insurance to consider:
Term insurance is for temporary simplified coverage with no cash value.
Permanent life insurance is for the life of the insured and the policy accumulates cash value.
Whole life insurance policy which provides both a death benefit and a cash value component. The policy is designed to remain in force for a lifetime and premiums stay level and the death benefit is guaranteed.
Variable* universal life insurance for permanent coverage and potentially higher cash value through investment options that involve risks including possible loss of principal amount invested.
Survivorship life insurance is for lifetime protection for two people that pays a benefit upon the passing of the surviving insured.
Disability insurance is designed to replace a percentage of earned income if accident or illness prevents the beneficiary from pursuing his or her livelihood.
Long-term care insurance is apolicy that pays some or all costs of nursing home care for qualified insureds. Premiums are based on the age of the applicant and are projected to remain stable for the life of the policy. Premium payments stop when the insured meets the qualifications for long-term care, which include medical necessity, cognitive impairment, and inability to carry out certain activities of daily living. Group policies are available.