Understanding The Benefits Of Term Universal Life Insurance
Term life insurance is popular because it is one of the cheapest types of life insurance
offering the maximum amount of death benefits for the most inexpensive premiums. However, a major problem with term life insurance is that no one can accurately predict whether you will need life insurance at the end of the term period. If youre still alive at the end of the term period, thats great news but outliving your term policy does put people in a dilemma especially if they need an extended coverage period. Such people have basically three options before them:Extend their term period agreeing to pay the higher premiums
Search for a more affordable term life policy. If youre not in the best of health at this time, youre looking at life insurance rates that could put a big hole in your pocket.
Be left without any insurance at all
The Solution Term Universal Life
But what if you could find a policy that offered a combination of term and universal life (UL) insurance? This type of crossbreed product would allow consumers to pay guaranteed level premiums for a pre-determined time frame. You can enjoy the same competitive rates of a traditional term life policy along with a level guaranteed death benefit. This policy provides the insurer with several advantages mainly the benefits of a cheap term life policy and the benefit of permanent life insurance coverage with savings.
Benefits of a Term Universal Life policy
There is definitely more flexibility with a term UL policy than with traditional term life insurance. There are a variety of options in term UL so you need to look at each in detail before making a decision. But in general, you can look forward to some general benefits:
Consumers of term life products can now enjoy the advantage of a term life policy and have the option of extending their policy at the end of the term period to a universal life insurance plan. The new level premium will be based on the age you are at the time you extend the policy.
In Term UL policyholders can adjust their premiums or length of coverage.
You will know the cost of converting term to universal life when your policy begins. Unlike term life insurance with a convertible option, without proof of insurability, term UL discloses the premiums you would have to pay when you switch to UL. You can lock in rates that are comparable to todays universal life policies, based on the policyholders age at that time.
Life insurance experts say that these recent products are incrementally less expensive and yet deliver the same level guaranteed period of coverage with some valuable flexibility options.
There are flexible payment options. You can pay premiums as a single amount or in specified periods.
Typically, youll have a longer grace period if a premium is not paid. Some allow policyholders to skip a payment or reduce a premium without compromising coverage.
The Term UL offers tax-deferred growth as well as easy access to the accumulated cash value component of a policy.
Although a term UL policy may work out to be only slightly cheaper than a term life policy with an option to convert to whole life, the transition to a universal policy in a term UL will be easier with a guaranteed growth path included in the original contract. Conversion to universal life is simply a continuation of the policy contract and not sold as a product that allows consumers to convert to whole life without having to prove insurability.
Who can benefit from Term UL?
This type of policy is appealing to consumers who have long term life insurance needs. People, who may want to use their death benefits to care for a dependent, cover funeral expenses, supplement a retirement fund, or create additional income for beneficiaries.
Anybody who knows that they want a term life product to start with and know they need a permanent life policy later on. This could be young people who are looking for a more pricey life insurance product that would suit their needs. It could be older people in their 60s looking to supplement their retirement funds. A term UL policy suits people who know they need permanent life insurance needs but want to start off with a cheaper product. It suits people who would like to keep their options open at the end of a term period.
Look for Term UL on aggregator websites
Term UL pricing is the result of tightening of regulations within the insurance industry and the pressure to keep term insurance rates low in keeping with the competitiveness of this industry. Its a competitive product that has the potential to overtake the popularity of traditional term life insurance policies.
Many life insurance companies have come up with their own Term UL plans. Aggregator websites will help you compare each of these products and find the one that best fits your life insurance requirements.
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