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Life Insurance
Variable Universal Life Insurance
Life insurance polices can be of different types and you need to select one which suits you the most.
Of the different policy types that you are likely to come across, Variable Universal Life Insurance policy is one type to consider. What are the features of this policy type and how can it suit your life insurance requirements? Let’s take a look.
If you are looking towards a life insurance policy that is more of an investment returns policy, Variable Life Insurance will be the right choice. This policy type, as with the other life insurance policy types, pays out on the death of the policyholder to the mentioned beneficiaries. In addition to this, the policy owner can borrow money against the policy and the premiums can be used to make investments according to the policyholder’s choice of investment opportunities. As a result, this policy can pay out more or less as this depending on how well the investment does.
Looking into the benefits offered by this policy type, Variable Life Insurance policy gives a lot of tax advantages to people who opt for it. The earnings they receive by way of their investment options through the policy are not taxable. In other words such investments are tax-free. In the event the policy pays out, provided all premiums are correctly paid and everything is in place, tax benefits can be accrued by the beneficiaries even at this point. People who are wealthy often opt for this policy because it offers them gift tax exemption. Payments for premiums are flexible, but the policyholder must pay up the minimum premium expected. When the premiums paid exceeds the maximum amount, the Universal Variable Life Insurance policy turns into a modified endowment policy in which the investment returns are tax-free and the death benefit payout is also exempted from tax.
The down side in taking a Variable Life Insurance policy is the cost. The premiums to be paid here are pretty expensive and it’s better to opt for it, only if you are able to make a commitment to such large premium amounts. While the policyholder has the option of choosing the investments into which they will put their money, these are limited to what the insurer puts out to them.
Before committing to a variable universal life insurance policy, read the terms and conditions of the policy and judge if it will suit your beneficiary’s financial requirements after your lifetime.
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