Types of Universal Life Insurance Policies

Let’s understand what is universal life insurance and how different types of universal life insurance work. Then, we will discuss what kind of policy you should consider for permanent life insurance needs.

Universal life policies are a hybrid life insurance product that combines the protection of a conventional term insurance policy with the cash value accumulation feature of a whole life policy. It’s like buying a permanent or life-long term life policy and investing the difference in fixed income securities (like treasury bills, bonds, or CDs). Unlike traditional whole life policies, universal life divides the death benefit and cash value accumulation into two separate components. That allows the universal life policy to be flexible, in that you may pay minimum premiums as long as policy expenses and the cost of insurance coverage are met. The amount of life insurance coverage can be changed, and the cash value growth will depend on the amount of premium you pay.

There are four types of universal life insurance policies:

1. Traditional or Non-Guaranteed Universal Life

Universal life insurance was developed out of whole life insurance and is similar to whole life insurance in certain ways. However, there are a few differences. Universal life is considered an “unbundled” product, which means that mortality expenses, interest rate, and other expenses are factored in to calculate premium rates and cash values. This offers flexibility in making your premium payments, but it also works against you as most life insurance agents sell this policy at the lowest allowable premium only, rather than the insurance companies’ guideline premium.

Because traditional universal life is a non-guaranteed product, it can end up costing you fortune (in the form of not having life insurance when you need it most, as well as income tax consequences of cancelling your policy, such as phantom income tax) if your policy is dropped (lapsed or cancelled) because of not having sufficient cash value or lack of further higher premiums. If you own a traditional or non-guaranteed universal plan, please call (877) 972-3262 now to explore your options for converting to a guaranteed universal life policy.

2. No Lapse Guaranteed Universal Life

This is pretty much like a traditional or non-guaranteed universal life policy except your premium is guaranteed never to increase, and as long as that guaranteed premium is paid on time, your death benefit will always be always in force. Guaranteed universal life is a fairly recent invention, and it is popular, because it functions as your life-long term policy or term life without expiration and with fixed premiums. This is a great universal life policy for anybody who is at least 55 years old and looking for life insurance for the rest of life with minimum fixed premiums. This policy can be used for estate tax liquidity, final expenses, a legacy for the next generation, or any other permanent life insurance need.

3. Indexed Universal Life

Indexed Universal life can be guaranteed or non guaranteed with an option to tie your return to a major stock market index like the S&P 500 (or some other domestic/international stock market indexes). Interest crediting goes up and down in lockstep with the index. Non guaranteed equity indexed universal life policies have similar drawbacks to non-guaranteed universal life. New guaranteed indexed universal life is a better option as it provide an opportunity to earn better interest rate with few guarantees. In all types of universal life – the no lapse guaranteed universal life policy is the best option if you are looking for permanent life insurance benefit with cash value growth.

4. Variable Universal Life

The variable universal life is very similar to traditional universal life or non-guaranteed indexed universal life. In this policy you can invest in the stock market (mainly various kind of mutual funds) directly rather than just to tie to a stock market index. The investment inside the variable universal life insurance policy is called separate accounts. You can invest and manage variety of mutual funds inside the policy, and the performance of a VUL policy will depend on the performance of these mutual funds. The variable universal life insurance (VUL) policy has all the drawbacks of non-guaranteed universal life insurance policies. We regularly receive calls from the people who have bought this policy when stock market was on top and now lost most of the cash value in their policy and required to pay premium again. We feel that this policy is ticking time bomb and no way you can win with this policy. Only way you can win with this policy is if you die sooner and your policy is still in force. If you own variable universal life, you should inspect your policy documents and consult with a experienced life insurance specialist at BeamaLife. Call us at (877) 972-3262 or contact us now.

If you have more questions that you would like to ask, please call us or contact us. We will be happy to answer to your questions and even suggest the most relevant universal life policy for you.

Dr. Shamji, California

"Neil has been an extremely professional who has been an outstanding financial advisor. He has looked to serve my needs to the best of his abilities; he is sincere to his words and has been a creative force in providing an amazing service. His greatest qualities that set him apart, is that he comes with the highest of integrity, extremely sincere and honest. I would recommend him with absolutely no reservation to my family and friends."

Dr. Ames, Washington

"When my friend first referred BeamaLife, I was not very sure that you will be able to help but I must say that you have done superb job of almost doubling my life insurance amount without any additional premium and help me take much higher income tax deduction. I admire your expertise in wealth creation and tax planning areas."

Dr. Martin, New Jersey

"BeamaLife was referred to me by my CPA for my pension plan funding. I was also wanted to take care of my estate tax need. Neil and his team have done a superb job of creatively funding my pension plan, acquiring most cost-effective life insurance for our estate planning need at per-tax dollar and helping us to get all our estate planning documents prepared."

Dr. Wasserman, New York

"I want to say thank you for your help in setting up pension plan and help us take substantial more income tax deduction. We appreciate your pension plan funding ideas as well – thanks again."

Dr. Patel, New Jersey

"We are impressed by your financial and estate planning expertise. Thanks for making our assets more secure and our life easy. Thanks for continued superb service and good luck."

Dr. Fisher, Tennessee

"Thank you for your help in reducing our defined benefit plan administration costs and increasing our funding level. We’ll be glad to introduce your firm to fellow physicians."

Dr. Noticewala, Pennsylvania

"When I was looking for a financial planning and risk management strategies I met with several advisors, but when I spoke with a Specialist at BeamaLife, she explained to me so much more than just life insurance. She explained to me the estate planning aspect of it and how that can be used as retirement planning and college education savings. Thank you BeamaLife, it was a pleasure doing business with you."

Dr. Chen, New Jersey

“My CPA referred me to BeamaLife for additional tax deduction strategy. They not only helped me reduce my income tax substantially but also helped me to secure my retirement income. They are very innovative and creative. Smart folks.”

Dr. Sharma, New Jersey

“BeamaLife has done a superb job in designing our asset allocation plan for defined benefit plan and personal investments portfolio. We were amazed to see the way BeamaLife worked with our CPA for an additional tax deduction even though we have one of the best tax accountant money can hire."

Mr. Bakare - A Very Successful Pharmacy Owner, New York

“I am very grateful to BeamaLife for the sound advice they have provided over the years. Higher tax deductions as well as the right asset allocation for our investments were just two examples of how I have benefitted from dealing with BeamaLife. They also put an effective estate planning strategy in place. Thank you for your help!”

Mr. Goldberg - Noteworthy Business Owner, New Jersey

“We have been dealing with BeamaLife for more than ten years now. They have been great advisors to us in terms of advanced risk management. They also helped to put in place pension plan strategies for our partners. BeamaLife has always been extremely professional and very attentive to our needs. Our sincere thanks!”

Mr. Peters - Software Company Owner, California

“I have the utmost trust and respect for BeamaLife’s expert staff. Regardless of the topic or question, BeamaLife has unique individuals with the right background to address my concerns. As a result, I have a much clearer understanding of how certain wealth creation strategies were the right fit for my company. I also have been able to take much higher income tax deductions for the corporation by implementing a plan set forth by BeamaLife. They have maintained an unmatched level of professionalism during my interactions with them over the years.”

Mr. Sakaria - Multiple Pharmacy Owner, New York

“BeamaLife has been a great advisor to us for many, many years. They not only helped us take higher income tax deductions but, also helped us organize our investment portfolio in an efficient manner. Through this relationship, we were able to create substantial wealth with the very low out-of-pocket expense.”

Mr. Bassanell - Multiple Pharmacy Owner, New York

“BeamaLife helped us immeasurably by focusing on the need to improve income tax deductions and educating us about estate planning. They guided us through completing all the documentation in a way that was easy to understand. I was comforted in knowing that they were just a phone call away and always available. We have consistently recommended them to friends and colleagues.”

Mr. Merchant - Software Company Owner, New York

“BeamaLife has been very instrumental in implementing the advanced level of executive bonus plans for our highly paid executives. In so doing, we have been able to retain the talent that makes this company thrive. Furthermore, they have helped us put in the right qualified and non-qualified pension plans for our senior executives. I would highly recommend BeamaLife for the complex financial strategies that businesses should implement.”