Best Universal Life Insurance Policies

The best universal life insurance policies match the earnings structure and death benefit to the specific needs of the insured and his or her family. Universal policies, which are permanent life insurance policies, can be set up to pay a fixed, variable or indexed return. This means that the amount of money credited to the cash account each year can be a level amount or an amount that can vary. Some insurance companies will guarantee that a minimum amount of interest will be paid. Unlike a whole life policy, where the mortality and expense fees do not decrease the amount of the death benefit, these fees do decrease the death benefit paid on a universal policy.

Universal life insurance policies offer policyholders the choice of a level or increasing death benefit:

» Get Top Universal Life Insurance Rates Now

Level Death Benefit

The value of the policy is paid to the beneficiary or beneficiaries when the policy matures upon the death of the policyholder. Note that a universal life policy can also mature when the policyholder reaches age 95 or 100. In this case, the value of the policy is paid to the policyholder. With a level death benefit policy, only the value of the policy is paid, not the gains attained in the cash account. This means the policyholder is effectively reducing the cost of the insurance over time.

Increasing Death Benefit

A universal policy with an increasing death benefit pays the combined amount of the value of the policy and the amount in the cash account. This increases the death benefit that will be paid to the beneficiary. However, the cost of the insurance to the policyholder does not decrease. As the policyholder gets older, he or she is paying more for the insurance.

Best Universal Life Insurance Strategies

The best universal life insurance strategies for increasing the value of the account depend on the way interest is calculated. A universal policy that is equity indexed is a variation on the standard fixed policy. Interest and earnings are credited based on a gain in an underlying market such as the S&P 500. While the preferred method of calculating interest varies among universal life insurance companies, the method most often used is called the “point-to-point” method.

The point-to-point method uses the starting point as the anniversary date of the contract. For example, if the start date is September 25, the policyholder is paid the rate earned from September 25 to September 24 of the following year. If the S&P 500 were at a higher level at any other time between the two dates, that amount would not be credited to the account. Further, most insurance companies limit the amount of interest that can be earned. For instance, if the maximum rate is capped at 8% and the S&P 500 increases 9%, only 8% of the 9% increase would be credited.

With universal life policy that is variable, the investments in the cash account are made at the direction of the policyholder, not by the investment managers who work for the insurance company. If the investments increase in value, the entire amount of the gain is credited to the account. If the investments decrease in value, the amount is deducted from the cash account resulting in a loss.

Best Universal Life Insurance Companies

Some of the best universal life insurance companies are also the overall best insurance companies in the United States. Each of these top five companies offer universal life insurance products that are suitable for people of different ages, of varying income levels and different insurance needs. Whether one needs a fixed, variable or indexed policy, he or she will more than likely be able to find it at AXA Equitable, Metropolitan Life (MetLife), New York Life, Prudential or USAA. For active members of the United States military, USAA is probably the best choice.

The best universal life insurance companies are either mutual companies or publicly traded companies. A mutual insurance company is one that is owned by the people who own the policies issued by the company, not by shareholders. While a mutual company has a chairman, a board of directors and is regulated by the state insurance board in which it is chartered, it must also usually meet state and federal capitalization requirements. A mutual insurance company does not sell shares of stock that trade on a domestic or foreign stock exchange. A publicly traded company, however, sells shares of stock, must issue quarterly financial statements and must meet all SEC compliance regulations.

Suitability of the Best Universal Life Insurance

The best universal life insurance companies and the agents who work for them need to ensure that the universal policies they sell are properly suited to their customers. Universal insurance policies can be suited to those who are looking to make sure their final expenses are taken care of, but they are better for those looking for a financial and estate planning tool.

Just like an annuity, a universal life insurance policy can be bought with a lump sum payment, otherwise known as a single premium. If the policyholder wants to bequeath money to a beneficiary or wants to avoid “death taxes” and probate, a universal life policy is often a wise choice.

What sets the best universal life insurance policy apart from other investment products, however, is that a business owner can provide a policy to an employee as a bonus and deduct the premiums as a business expense, thus potentially reducing current year tax liability. These same business owners can also purchase a policy with a partner named as the beneficiary so that the business will not suffer in the event of his or her death. Finally, a universal policy is an excellent choice for building additional retirement savings, as all earnings grow tax-deferred.

For the primary earner of a family who needs to make sure that his or her spouse and children will not suffer a loss in their standard of living, the best universal life policy offers cash reserves along with the death benefit.

To find the best life insurance products request a free, comprehensive quote comparision. Secure your future today, Get Started Now.