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values greater than the guaranteed amount, depending on interest rates and how the market performs. Whole life insurance:
• Allows for cash value growth on a guaranteed basis.
• You may elect to discontinue coverage and surrender the policy for the cash value, if any, or use existing cash value to purchase a policy with a lower death benefit amount that requires no additional premium payments.
• The policy may mature for its cash value at a specific time (e.g., age 95). Often the cash values are guaranteed to equal the policy death benefit at maturity.
Fixed Universal Life Insurance
If you’re looking for a way to combine life insurance death benefit protection and cash value accumulation with flexible terms under one policy, you may want to consider a fixed universal life insurance policy. Within certain limits, fixed universal life insurance lets you adjust when and how much you pay in premiums. You also can adjust the amount of your insurance coverage in later years, although increases in coverage may require additional evalua-
tion of your health and other factors at that time. You affect the accumulation of cash values through the amount and timing of your premium payments.
Some of the key benefits of this insur-
ance option include the flexibility to let
you reduce or skip payments (within
certain constraints) when times are tight, and pay additional premi- ums to increase the tax-deferred cash values when your budget allows. Also, the more premium you pay, the greater the potential cash value. However, if insufficient premiums are paid, the policy may have little or no cash value and may lapse. Here’s how fixed universal life differs from other life insurance policies:
Life Insurance Advantages and Disadvantages 27
Do not dwell in the past,
do not dream of the future, concentrate the mind on the present moment.
—Buddha