Universal Life Insurance

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There are two broad categories of life insurance that are available for permanent 
coverage. They are known as whole life and universal life insurance policies.

Today, universal life insurance for seniors with guaranteed premiums and face amounts comprise the majority of permanent coverage. These policies are consumer friendly because they make it easy to understand and compare cost from one carrier to another. This is a major advantage in most cases because it’s easy to compare prices when all premiums are guaranteed to be level for as long as the insured lives.  

Most major insurance companies offer universal life insurance coverage. Although some policies may generate nominal amounts of cash value, their primary benefit is the guaranteed nature of the premium and face amount, also known as the death benefit.

Underwriting categories for permanent coverage can be more advantageous for the insured as well, with some insurance companies offering special rates based on age and particular health issues. 

Universal Life Insurance Facts

universal life insurance pros for seniors
  • A universal life insurance policy will last a lifetime (as long as you pay the premiums)
  • These policies can be structured so that your premium and face amount remain the same for the life of the policy. You can guarantee the premium and face amount for a specific period, such as up to age 105 (other ages are also available).
  • Some companies offer people with certain health issues a better underwriting rating through different programs only available with universal life insurance. This is called table shaving.
  • Can be structured to accumulate no cash value to keep the premiums lower. There is no reason for cash accumulation because if you borrow money out of the policy you can affect the guarantees. When you pass, your beneficiary gets the face amount and the insurance company keeps the cash value.
  • Universal life policies are a good way to provide heirs for cash to assist with estate taxes. A survivorship, or second to die policy will usually cost less than two individual policies. Additionally, if one person is uninsurable, you still may be able to get survivorship coverage.
universal life insurance cons for seniors
  • Universal life policies are generally more expensive than term life, but will last your lifetime. (At age 70 and older you may find the cost is comparable or even less expensive than a 20 year term policy. If you are a candidate for table shaving (see pros) you may find your premium is even less.
  • A permanent policy may not be suitable for your needs. If you are a young couple with a family, you may be better off buying term insurance where you can get much more term coverage while their children and your estate is growing.
  • There aren't many "cons" here because if a permanent policy is right for you, then guaranteed premium universal life insurance is most likely your least expensive option.
chronic and critical care riders for seniors

In additions to premiums there are several other points that should be considered by the consumer but are generally unknown to most buyers.  I am speaking of several new riders that are available on some policies today, and most likely will become more the norm as time goes on.

For example, several universal life carriers offer an enhanced chronic illness benefit rider that can allow the insured to obtain a maximum of 2% of the face value of their policy on a monthly basis.  This rider can be accessed under certain conditions including a statement by a licensed healthcare provider that the impairment has occurred in the last year and must be re-certified annually.  What’s more, the qualifications for this benefit are similar to or exactly the same at those qualifications that allow access to funds for those who own Long Term Care policies.   

While this rider does not offer many of the benefits of an LTC policy such as inflation riders and less stringent underwriting requirements, the cost of the universal policy with a substantial death benefit will in many cases, can be significantly less.

payment options for universal life insurance for seniors

You can pay your premium monthly, quarterly, semi-annually or annually. 

Some carriers also offer a “return of premium” rider which gives the insured a return of a percentage premiums paid to date at certain points in the life of the policy.  For instance, one carrier provides the ability to surrender your policy (you will give up your coverage back to the company) and receive 100% of the premiums paid to date at either the 20th or the 25th year of the policy.  This can be of enormous value if your insurance objective has changed over time.

As with other permanent policies, universal life can be structured with a single payment, a 10-year payment and longer choices depending on your need. 

LifeNet Insurance Solutions Can Help

 

Get a free quote for universal life insurance here. Then give us a call and we will let you know if we can find you a better value.

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