With the Wall-Street Journal and many other publications talking about failing Universal Life Insurance, many people are wondering what they should do with their policies. You may even have some good cash value built up as well, so what should you know before you cash out?
Many people, I find, are looking for a better place to put their money. However, as they learned through their Universal Life policy, there wasn’t as much reward as there was risk.
Cashing out a Universal Life policy is an option, however, there can be tax implications, and there may be better options.
Most likely, you were sold a Universal Life insurance policy because of the potential benefits; tax-free growth, tax-free retirement, guarantees, and death benefit.
However, what most people don’t know about is this…High Cash Value Whole Life insurance offers you the many of the same benefits without the risk.
The problem with Universal Life insurance is the costs. The costs go up every year, regardless. This means your fees are always increasing, and if you don’t get enough growth out of the policy, your fees will eat up all of your cash value.
This is what many people are beginning to see happen inside their Universal Life policies. No growth with higher fees, meaning you have to pay more premium to maintain the policy.
Whole life fees do not change. You policy is guaranteed to grow, however, because it is whole life insurance and not term insurance (Universal Life policies use term insurance) you will have the policy for the rest of your life if you treat it correctly.
The best part is this: all that cash value you have built up inside your Universal Life policy can be transferred directly over to your whole life insurance policy, with no fees or taxes.
This money will immediately start growing and giving you benefits. The years you have spent building will not go to waste.
Also, your cash value will be immediately available for you to borrow against.
In a Whole Life insurance policy, you will see a steady growth with added tax and death benefits. Yet you won’t have to worry about your policy failing you as you get older. In fact, it will get better with time, offering you more insurance.
If you are looking to reduce the risk and hold onto the money inside your Universal Life policy, Whole Life insurance may provide you with a better all around solution.
Contact us if you want more information or help exchanging your Universal Life policy.
With the Federal deficit at historical highs, artificially low interest rates, banks leveraging money out of control, and the recession dragging on, it has become more difficult for many people to justify putting all of their money at risk in investments. This leads to many people having significant cash reserves. Whether this cash is for business, emergency funds, or savings dollars, many people are having trouble figuring out what to do with cash savings that is often times sitting in a bank account earning little to no interest.
To the general public the idea of borrowing money to pay for an insurance premium seems like an outrageous idea. However, the need for premium financing is huge, but these aren’t your average insurance policies.
Ever bought or sold a home? Then you’ve most likely used a real estate agent.
“It is during our darkest moments that we must focus to see the light.” – Aristotle Onassis
This is a guest posting from Einstein Structured Settlements…
