life insurance tax deductible
As mentioned in the previous article, universal life (UL) was introduced in 1981-82, in response to a historically high interest environment and an awareness consumers of the value of self-directed investments because traditional insurance could not compete with interest rates in the short term.
Here are some characteristics as follows
1. Account Value
The value of the account of a universal life plan is the sum of gross value of all investment accounts within the policy, including income, after deductions of expenses this month.
2. Cash Surrender Value
The cash surrender value of a universal life plan is the current account value, less outstanding loans and delivery charges. Rescue Charges are usually based on a multiple of the minimum premium required policy for the back-end charges are larger than face final charges.
3. Premiums / Contributions
The premiums are the amounts necessary to pay the cost of insurance fees and other costs for the policy. Deposits are the surpluses that are of a pure investment.
4. Death Benefit Options
The amount of death benefit payable under a universal life policy is based on 1 of 4 options different
a) compensation for death Level: Level coverage for the duration of the policy.
Benefit Level b) death, more cumulative gross premiums: increases in death benefits by the amount of each gross deposit policy.
c) The level of death benefit, indexed: increases the amount of death benefits, annually, for a predetermined percentage.
d) Level Death Benefit plus the value of the account: The total death benefit is always equal to its initial nominal value plus the gross value of the account. This is the most popular chosen by 90% of the owners of Universal life insurance policies' because
the gross value of the account is tax free.
5. Premium Flexibility
Shells of the premium, plus accrued investment income, should be sufficient to pay all expenses and deductions, in order to maintain the current policy, tax-exempt life insurance policy, flexible premium.
Universal Life Insurance is not for all consumers
Its flexibility tends to be reflected in administration costs much higher than found in traditional plans of a lifetime and the variable nature of the plan may make it unsuitable for customers they want guarantees
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