Permanent Life Insurance vs Universal (also known as UL)
When selecting whether this is right for you, you should always seek professional advice before the implementation of this type of solution, as there are many advanced strategies, customized to your need. We recommend that a proper needs analysis is conducted to ensure you have the right amount of coverage, type of insurance and that the insured can maintain funding for the period chosen. Life insurance contract remains in effect for your entire lifetime, as long as you continue to fund the policy. I.e., If you were to choose a Permanent or UL plan, you could select a term, as little eight years, could be twenty years or more, depending on the provider. The insured would maintain the insurance contract for the time frame selected, and then the policy PPUA (Policy Paid-Up Additions) would continue to finance the contract obligations after the eight or twentyyear period have been satisfied. (Some limits may apply.) Permanent insurance may be either whole participating life (WL) or universal life (UL).
Both types may offer:
Guaranteed amount of insurance coverage for life at a fixed premium. Cash value that can be accessed during your lifetime or passed on to beneficiaries.
How they differ:
With participating life insurance, premiums from each policyholder are invested and used to pay policy claims and expenses. A portion of residual earnings may be paid to policyholders as dividends. Universal life insurance allows you to contribute to a cash value accumulation component attached to the policy. Policyholders can choose the type of investment for their contributions. The cash value (including investment earnings) is tax-free unless, it is withdrawn by the policyholder. (Some limits may apply.) When funding UL, you can choose how you wish to fund the policy, with set minimums or the maximum allowed.
Life insurance provides tax-free liquidity to your estate exactly when it is needed. Used to fund Buy-Sell, Share-Holders Agreements, Tax Minimization, Will, Power of Attorney, Trust Planning, and Succession.
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