Universal Life Insurance and Survivorship Universal Life Insurance with Guarantees

The Problem that is addressed

One of the problems with universal life insurance (a problem that can be overcome) is that the premiums paid may not be sufficient to keep the policy going. In other words, you could pay a premium and down the road the policy does not continue.

This is because of the flexible nature of universal life insurance or joint and survivor (survivorship) universal life insurance policies. Since there is flexibility on the premium paid, one takes a risk that the amount paid will be insufficient in later years. This is different than whole life insurance policies which guarantee the premium for the life of the policy.

The Solution

Insurance companies have come up with a solution - to guarantee the insurance benefit on a universal life insurance policy even if the cash value in the policy goes to zero. This is known as a “secondary guarantee.” You agree to pay a premium which is often less than a whole life insurance premium and if you keep your payments up the policy’s death benefit is now guaranteed.

There are also new provisions where you can even pay a lower premium than the one that guarantees a policy, watch how it performs and thus possibly pay even a lower premium over time. If the policy doesn’t perform then you can make up the premium with what is called the “catch up provision.” You then deposit the back amounts that you would have had to deposit anyway.

Using this type of universal life insurance for Survivorship Life Insurance

These secondary guarantee policies are often used for estate planning where the crucial component is a guarantee of the death benefit and cash values become somewhat less important. In estate planning, survivorship life insurance (also called joint and survivor life insurance or second to die life insurance) is often used to create the cash liquidity to pay the estate taxes. This is often done through a legal vehicle called an Irrevocable Life Insurance Trust (ILIT) which, if set up correctly by legal counsel, can allow the life insurance proceeds to be received free of income and estate taxes.

Finding out more

To learn more, explore this site or contact your Lifeinsure.com advisor toll free at 866-691-0100 or request a quote on survivorship life insurance. Your experience advisor at Lifeinsure.com will search the market for the lowest quotes from highly rated insurance companies and also advise you on the different funding methods.