Not sure where to start? Fill out our unique form and we will find the best life insurance for you.
Are you wondering which Houston TX universal life policy is the best for you? It may seem daunting since there are several to choose from. The best way to decide is to compare all your options and see the pros and cons of each. Come in to meet any of the experts with Best Life Insurance Houston Agency to ask the questions you may have.
A Look into the General Houston TX Universal Life Policy
As mentioned earlier, universal life policies are a type of permanent life insurance plan. These plans are designed to protect you for a lifetime while offering you some side benefits for the long term. Like most types of life insurance, you may be required to go through with a medical exam. Without it, you might not get the best options available to you.
So what makes universal life plans different from other permanent life insurance plans? You’ll probably hear this a lot about them: flexibility!
Okay, so what makes these types of plans “flexible?” It means you may have several more options to adjust the death benefits and premium payments to an extent. Rather than having a fixed amount for either, most universal life plans give you some leeway in deciding.
Granted, some universal life plans won’t contain a flexible-premium option. Some will require a single premium or fixed premiums. A single premium is a single lump-sum premium. On the other hand, fixed premiums are scheduled fixed premiums.
Where do universal life policies fall in with other types of life insurance plans?
Of the various permanent life insurance policies, universal life insurance is one of the most common after whole life insurance. To explain how it differs from other plans in simple terms, universal life insurance (UL) is a more flexible version of whole life insurance.
Whole life insurance is the most common of the permanent life insurance plans out there. Like other permanent life insurance plans, as long as you pay the premium, you’ll have protection that’ll last for a lifetime. With a guaranteed death benefit and cash value, it’s a balanced option if you want to focus more on the protection of having coverage. These policies also have a fixed premium, so you’ll be paying the same amount from start to finish.
Now, the usual Houston TX universal life policy also offers protection for a lifetime. Not to mention it also has guaranteed death benefits and cash value. Looking at it like that, it doesn’t look too different from whole life insurance.
However, in most universal life policies, the death benefits and premiums are more flexible. Depending on the specific policy, the way your cash value accumulates also differs from other life insurance plans.
Other Benefits of Universal Life Plans
Now, what is another benefit of universal life insurance? The minimum amount of premium payments is comparable to term life insurance plans. And term life insurance plans are usually the most affordable insurance plans. However, unlike term life plans, universal life plans can accumulate cash value.
Universal life plans are built upon two things: an investments savings component (i.e., cash value) and the cost of insurance (COI). As implied, COI is the minimum amount of premium payment to keep the policy in force. It’s several items rolled together in one price, including mortality charges, policy administration, and other direct expenses. COI will vary by the policy since it’s based on your age, insurability, and insurance risk amount.
Any collected premium that is excess of the cost will accumulate as cash value. Over time, the cost of insurance will increase as you age. However, this is where the premiums being flexible can come in. If you have a sufficient amount of cash value, it can cover the increases in the COI.
In simpler terms, so long as your policy has enough cash value, you can use it to pay your premiums. However, whether it’ll only pay a portion or allow you to skip the payment entirely is dependent on how much cash value there is.
The Other Variant Universal Life Policies Out There
As mentioned before, universal life plans can accumulate cash value. Every time you pay a premium that is more than the COI, it’s added towards the policy’s cash value. That cash value can continue increasing tax-deferred (tax-free) by accumulating interest.
Now, depending on the universal life plan you choose, there may be different ways it’ll accumulate interest.
- Guaranteed Universal Life Insurance- Generally, guaranteed universal life policies’ cash value will grow at a fixed rate. This policy is the most conservative method and is the closest to whole life insurance. Because of that, these policies usually won’t offer flexibility in the death benefit or premium amounts.
- Indexed Universal Life Insurance- With indexed universal life, the interest rate is based on a stock index of your choice. If the index goes up, then your cash value will also grow a portion of that. However, there’s usually a cap on how much you gain regardless if the index is doing well.
- On the other hand, if the index plummets, you’ll usually have a guarantee that you won’t lose money. It’s closer to say that you’re borrowing the interest rate of the index.
- Variable Universal Life Insurance- Variable universal life policies are a mix of variable life plans and universal life plans. Take the flexibility in varying your premium and death benefit amounts from universal life plans and combine them with variable life plans’ ability to invest your cash value.
- You’ll get a variable universal life policy. Your policy will have sub-accounts that act like mutual funds that you can invest your cash value into. You’ll need to manage this type of policy actively, but you’ll also have the highest potential for returns.
Choosing The Plan That Best Suits You
Before you come to a decision, you should review all your options. Contact us if you have any questions. Any of the experts with Best Life Insurance Houston Agency can sit down and answer your concerns about the Houston TX universal life policy best for you.
Houston, TX Fun Facts:
- With over 10,000 restaurants and hundreds of food trucks, Houston residents eat out more than in any other city in the U.S.
- The population of Houston makes it the 4th largest city in the country!
- Houston Heights, one of the most upscale neighborhoods in Houston, is actually dry. It has been dry for more than 100 years since it was its own town and threatened to become overrun by seedy saloons.
- For more information, check out the official website!