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Is my statement allowed on life insurance?
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Is my statement allowed on life insurance?
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How to get free insurance policies?
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FAQ
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What is Life Insurance?
Life insurance protects your loved ones when you pass away. A life insurance policy is a private contract between you and an insurance company. In the policy agreement, you agree to make premium payments in exchange for a coverage amount to be paid out if you die while the policy is active. The policy is legally binding and regulated by the Departments of Insurance in all 50 states to ensure the insurance company will be in a position to pay out your coverage amount.
Do I Need Life Insurance?
At a foundational level, life insurance offers you and your loved ones protection in the event of your passing. If someone relies on you for financial support or would need financial resources if you weren't there, then purchasing life insurance is probably a smart decision.
What type of life insurance do I need?
The answer to this question depends on several factors. If you’re looking for lifetime coverage that offers you the chance to build tax-efficient wealth, then permanent life insurance (specifically Index Universal Life or Variable Universal Life insurance) is likely the right type for you. If you are looking for a more affordable option that provides short-term coverage, then Term Life Insurance may be better for you. Additionally, if you want protection in the event of chronic, critical, or terminal illness, or you need long term care support, then it’s wise to consider which life insurance type will provide the appropriate riders for your needs.
I have life insurance through work. Is it enough?
No, it is highly likely your employer-sponsored coverage is not enough. The coverage only lasts while you are employed and doesn’t provide additional protections. We recommend purchasing a policy you own as your primary coverage.
What is the "coverage" amount?
The coverage amount of a life insurance policy is the amount of money the policy will pay out to the designated beneficiary (or beneficiaries) if the policyholder dies while the policy is active. This amount is typically determined by the policyholder. Higher coverage amounts will cost the policyholder more in premiums, so it’s important to be thoughtful about determining the appropriate coverage amount when buying a life insurance policy.
How much life insurance coverage do I need?
Financial advisors recommend that you have enough savings and life insurance coverage to equal at least five to ten times your annual salary. That is the recommended minimum amount. If you have already built up enough savings to provide that safety net on your own - then great work! However, the vast majority of people are busy building a life and don't reach that point until they are in their retirement years. Life insurance is the foundation of proper financial planning and can help you protect your family’s future.
What is covered by life insurance?
The short answer is, most things. Included below are some common questions we get that are covered:
- Accidents: Yes, accidents (such as car crashes, freak accidents) are covered.
- Natural Illnesses: Yes, cancer, heart attack, stroke, rare diseases, etc. are all covered by life insurance. You don’t get penalized for getting sick. This is why you purchase insurance.
- Pandemics: Yes, they’re covered. Pandemics are not among the very limited exclusions (reason a claim would not be paid) for the policies and carriers we work with.
What is not covered by life insurance?
You can check your policy for the exact list of exclusion, however, below are cases where policy proceeds to your beneficiary would not be paid:
- Suicide within 2 years (unless state law requires that period to be shorter)
- False Statements by Applicant
- Insurance Fraud
- Special Limitations (career specific)
That last bucket can contain various items that may be handled by a special add-on to a policy called a “rider”.
When is the best time to buy life insurance?
Here are some common life events when it’s a good idea to review your life insurance coverage and start shopping:
- You start your career (if you have significant private student debt with co-signers)
- You get married
- You buy a home (with a mortgage)
- You have a new baby on the way
- You start a business
Life insurance gets more expensive the older you get. The younger and healthier you are when you get started, the easier it is to qualify for coverage and decrease the risk of a higher rate or not qualifying due to unforeseen health issues.
What is a beneficiary?
A person or entity designated to receive the death benefit from a life insurance policy. The policyholder chooses the beneficiary when they purchase the policy. The beneficiary can be changed at any time by the policyholder. Upon the death of the insured, the death benefit is paid to the designated beneficiary. This can be a single person, multiple people, or an organization.
What is a death benefit?
The death benefit of a life insurance policy is the payment made by a life insurance carrier to the designated beneficiary or beneficiaries upon the death of the insured person. Death benefits are not taxed so the full amount goes to the designated beneficiaries according to the policyholder’s desired allocation plan.
How long do I need life insurance?
That depends on how long you want to ensure your loved ones will receive financial support if you pass away. Most people typically plan to have some form of life insurance coverage at least until they retire. One reason we at Amplify usually recommend Index Universal Life or Variable Universal Life insurance is they are types of permanent life insurance, meaning the coverage lasts the entire lifetime of the policyholder. With these types of policies your beneficiaries will be taken care of no matter when you pass.
How much does life insurance cost?
The cost of your policy will depend primarily on the type of policy you purchase, your age, health, and your desired coverage amount. It’s difficult to say how much it will cost for you without knowing more about you. However, lower coverage amounts will generally result in lower premiums. The amount you pay in premiums may or may not change over time depending on the type of policy you choose (e.g Term policy premiums don’t change whereas IUL or VUL premiums can be flexible).
FAQ
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What are the different types of life insurance?
There are many different types of life insurance to choose from. The most common types consumers purchase are Term Life Insurance, Permanent Life Insurance, or a Combination Policy. What you purchase ultimately depends on your needs and a variety of factors, including how long you need coverage for, how much you want to pay, and whether you’re looking to build cash value over time.
What is Term Life Insurance?
Term Life Insurance is a type of life insurance policy that provides coverage for a specific period of time, or "term." If the policyholder dies during the term, the policy pays out a death benefit to the beneficiary. If the policyholder does not die during the term, the policy does not pay out and the coverage ends on the expiry date.
Term Life Insurance is typically less expensive than Permanent Life Insurance, however, it does not build cash value or offer tax-advantaged savings like certain types of Permanent Life Insurance.
What is Permanent Life Insurance?
Permanent Life Insurance is a type of life insurance policy that provides coverage for the entirety of the policyholder's lifetime* as long as the policy remains active. Permanent Life Insurance policies also have a savings component, known as the cash value, which accumulates over time and can be accessed by the policyholder during their lifetime. There are several types of Permanent Life Insurance, including Whole Life Insurance and Universal Life Insurance.
*Policies typically mature, meaning they pay out the benefit amount, if the policyholder lives to be 120 or 121 years old (could be shorter, depending on the policy).
What Is Universal Life Insurance?
Universal Life Insurance is a type of Permanent Life insurance that provides flexible premiums and the ability to adjust the death benefit. It combines the features of Term Life Insurance, which provides protection for a specific period of time, with the savings element of Permanent Life Insurance, which builds cash value over time. There are several types of Universal Life Insurance, a couple of which we can dive deeper on are:
- Indexed Universal Life Insurance
- Variable Universal Life Insurance
See the individual FAQs for each type to learn more.
What is Index Universal Life (IUL) Insurance?
A type of Permanent Life Insurance that provides coverage for the entire lifetime* of the insured, as long as the policy is in force and premiums are paid. It is similar to Guaranteed Universal Life Insurance in that it also provides a death benefit to the beneficiaries of the policy and also accumulates cash value over time. Rather than earning a fixed interest rate the cash value of an IUL policy is tied to a stock market index, such as the S&P 500. Usually, the cash value of the policy will increase when the stock market index increases, but will not decrease when the stock market index decreases. This means that the cash value of the policy has the potential to increase (up to a cap stated in the policy) at a faster rate than Guaranteed or Fixed Universal Life Insurance. IUL policies also have a minimum guaranteed interest rate, which means that the cash value will not decrease below a certain level.
Visit our IUL product page to learn more.
*Policies typically mature, meaning they pay out the benefit amount, if the policyholder lives to be 120 or 121 years old (could be shorter, depending on the policy).
What is Variable Universal Life (VUL) Insurance?
A type of Permanent Life Insurance that provides both a death benefit and a savings or investment component. It is similar to Indexed Universal Life Insurance but with the added feature of allowing policyholders to allocate their cash value into different investment options, such as mutual funds. One of the main advantages of VUL insurance is that it allows policyholders to participate in the potential growth of the stock market or other securities, and also allows them to have more control over the investment options of their cash value.
What is the difference between VUL and IUL?
The main difference between VUL and IUL is the way the cash value account works.
With a VUL policy you can invest your cash value in a variety of sub accounts - which are like mutual funds. Your policy cash value can increase or decrease depending on the performance of the sub accounts. This means VULs are more risky but potentially more lucrative.
IULs, however, receive credits based on the performance of a market index (e.g. S&P 500). IUL policies have a floor on losses ( usually 0%, meaning no loss of cash value if the price of the index decreases) and a ceiling on gains (e.g 8-9%, meaning if the chosen index goes up 20% in a year, the policyholder only receives about half of those gains). This trade off of lower gains for no downside is appealing to policyholders who want the potential to earn high credits, but do not wish to take on the risk of losses. Carriers may offer a variety of indexes to track and a variety of ways that credits are calculated based on the index.
What are the advantages of Universal Life Insurance?
Universal Life Insurance offers several advantages over Term Life Insurance, including:
- Flexible Premiums: Unlike other types of life insurance, Universal Life Insurance allows policyholders to adjust the premium amount and payment frequency based on their changing financial situation.
- Cash Value Accumulation: Universal Life Insurance policies have a cash value component that grows over time, based on interest rates and investment returns.
- Tax Benefits: The cash value of a Universal Life Insurance policy grows tax-deferred, meaning that policyholders do not pay taxes on the earnings until they withdraw them.
- Permanent Coverage: Universal Life Insurance provides coverage for the insured's entire lifetime*, as long as premiums are paid.
- Customizable Death Benefit: Universal Life Insurance policies typically allow policyholders to adjust the death benefit amount over time. This can be useful for those who want to increase or decrease their coverage based on changes in their financial situation.
*Policies typically mature, meaning they pay out the benefit amount, if the policyholder lives to be 120 or 121 years old (could be shorter, depending on the policy).
Learn more about how Universal Life Insurance compares to other insurance and wealth building vehicles in our Guide to Life Insurance.
When should I consider Universal Life Insurance as part of my insurance plan?
There are several factors that can help determine whether Universal Life Insurance is right for you at this stage of your life, but here are the high-level criteria to help you determine if this tool is right for you:
- Are you looking for a death benefit? First and foremost, Amplify only recommends Universal Life Insurance to those looking for some form of coverage in the event of their death. If you’re only considering Universal Life for its cash value savings component then it’s probably not the best option for you.
- Do you have sufficient free-cash flow? Because Universal Life Insurance has higher premiums than Term Life Insurance, Amplify typically only recommends Universal Life Insurance to those who can afford the higher monthly payments. If money is tight, or your income is highly variable then there are other ways to get coverage that might work better for you.
- Does it make sense for you at this stage of life? There are several tax-advantaged accounts that are great tools for building wealth. Your life situation typically determines which of these accounts you can leverage. For example, if you are able to contribute to a 401k through your employer, Amplify typically recommends you contribute to that account first, especially if your employer offers some kind of matching. Ultimately, which tax-advantaged vehicles you leverage as part of your holistic financial plan really depends on your goals, risk tolerance, stage of life, and several other factors.
Ultimately, we’ve seen Universal Life Insurance work well for clients of all different types. If you’re unsure whether Universal Life is right for you, check out our website or give us a call. We can offer personalized recommendations that are right for you.
Is Whole Life Insurance the same as Universal Life Insurance?
No, Whole Life is not synonymous with Universal Life Insurance. Whole Life offers guaranteed coverage for your whole life, and a savings account that grows at a conservative, guaranteed rate of return (often 3-5%). With Whole Life, you typically cannot change your premiums or your coverage amount throughout your life. In addition, average Whole Life insurance premiums could be 1.5-3x higher than other Permanent Life Insurance product types for the same coverage amount. There are other types of Permanent Life Insurance products designed to cover you for your entire lifetime* and that offer more flexibility and higher cash accumulation returns, although their future performance may not be guaranteed.
*Policies typically mature, meaning they pay out the benefit amount, if the policyholder lives to be 120 or 121 years old (could be shorter, depending on the policy).
What is "Combination" Life Insurance?
Combination Life Insurance is a type of policy that combines elements of both Term Life Insurance and Permanent Life Insurance. With a combination policy, you get the coverage of a Term Life Insurance policy for a specified period of time, typically 10, 20, or 30 years. The policy also includes a savings component, similar to a Permanent Life Insurance policy, that can accumulate cash value over time.
How does the cost compare for different policy types?
The cost of life insurance is highly dependent on the individual being insured, the type of insurance they want, and the amount of coverage they are looking for. The easiest way to get a quote and see what you qualify for is to complete our five-minute questionnaire.
Why should I put my savings here versus other savings options?
There are several great vehicles for saving and growing your wealth. We recommend consulting with a qualified advisor to find the optimal financial plan for you. That said, we absolutely think that an IUL or VUL life insurance policy should be a part of a holistic financial plan for suitable individuals. These policies offer several advantages over other savings vehicles such as the chance to grow tax-deferred wealth that can be accessed tax-free without the age restrictions or contribution limits of other retirement plans, and without the use-case restrictions of other vehicles like HSAs or 529s , and tax-free death benefit
FAQ
Why Bundle
Why save funds with life insurance? Why bundle protection and growth?
Cash value is a powerful savings and investment tool offered within a Permanent Life Insurance policy that can help you achieve your financial goals. Cash value life insurance can be used to generate tax-efficient growth, save for retirement, generate income, and provide liquidity for future needs. Additionally, cash value policies are an important aspect of succession planning and offer protection against creditors and legal cases in most states. With its many benefits, cash value life insurance is an excellent choice for those seeking long-term financial security.
Why should I choose Universal Life over a normal investment account?
Saving through a life insurance policy allows you to grow your returns tax deferred and access your principal and growth tax-efficiently. That means you could save 25%+ on income taxes or 15-20% on capital gains taxes just by saving through a life insurance policy vs. a brokerage account. Additionally, you can get the lifelong protection value that's a tax-free wealth transfer to your beneficiaries.
How do I use cash value life insurance to tax-efficiently grow wealth?
When you pay your premium, a percentage of that money is used to cover the cost of your insurance and any fees associated with your policy. The rest of your premium is used to fund your cash value – similar to a savings account. Depending on the type of policy you have, the money in your cash value account is invested either by the insurance company or you. Gains generated in this account grow tax-deferred and can be accessed tax-free if policy guidelines are followed.
Tax-efficient cash accumulation is a unique advantage of Permanent Life Insurance policies not available in Term Life Insurance policies. This tax-efficient growth is what makes cash-value life insurance an attractive option for those who have already maxed out contributions to other tax-deferred accounts like 401(k)s and Roth IRAs.
How do I use cash value life insurance to protect my loved ones?
How does my cash value grow?
Cash value in Permanent Life Insurance policies grows through a combination of premiums and investment returns. There are different ways cash value can grow depending on the policy type.
- Whole Life policies have guaranteed fixed cash value accounts that grow according to the insurance company's terms (e.g. 3-5%). The policyholder has no control over how the cash value is invested.
- Indexed Universal Life (IUL) policies accumulate cash value based on returns linked to the performance of a stock market index. Policyholders can choose which index they want their cash value account to track.
- Variable Universal Life (VUL) policies invest funds in subaccounts that function similar to mutual funds, and the cash value grows or falls based on subaccount performance. VUL policyholders have full discretion over how their cash value is invested within the subaccount.
Each type of cash value product comes with varying risks and rewards. Learn more in our Guide to Life Insurance.
Is there a limit on how much money I can put into my policy?
There is a limit to how much you can contribute to a cash value insurance policy, known as the "maximum premium." The limit is determined by the insurance company and is based on factors such as your age, health, and the type of policy you have. However, if you choose a higher death benefit, you may be able to contribute a higher amount of premium.
It's important to be aware of the maximum premium limit because exceeding it could cause the policy to lose its tax advantages and trigger gift tax implications. The maximum premium is the highest amount of money you can pay into the policy within a specific time period, such as a year or the life of the policy.
What percent of the money I put into my policy goes toward the cash value?
This amount will vary based on the policy design and specific age and health of the policyholder. As a general rule, 60% or more of your gross premium can go towards your cash value in the initial years of owning the policy. This amount will change over time as a larger percentage begins to be allocated to your insurance as you age.
Is there a penalty if I take out cash value early?
Yes, there can be penalties for withdrawing funds too early from a Permanent Life Insurance policy. Specifically, if you withdraw funds before a certain point, you may be subject to surrender charges. These charges are designed to discourage early withdrawals and to help offset the costs associated with issuing and maintaining the policy.
After the surrender period, which varies by company, you will be able to access all of the cash accumulation value within your policy.
What can the money be used for?
There are very few (if any) restrictions on how you can use the cash in your cash value account. Common reasons people leverage these vehicles include:
- Retirement savings and income: Cash value life insurance can serve as a retirement savings and income tool, mimicking the tax benefits of a Roth IRA with flexible contribution caps.
- Future liquidity for investment: you can take advantage of a competitive loan rate while your total cash value continues to earn interest. This innovative banking strategy utilizes the cash value of your life insurance policy to provide funding for personal or business needs such as a down payment, while still allowing your savings to grow.
Can I change my cash accumulation strategy after getting the policy?
Yes, you can typically change your cash accumulation strategy in an Index Universal Life (IUL) or Variable Universal Life (VUL) policy after obtaining it. Both IUL and VUL policies offer flexibility, allowing policyholders to adjust their investment preferences.
For IUL policies, you can modify your cash accumulation strategy by changing the allocation of the cash value to different indexed accounts.
In VUL policies, you can adjust your cash accumulation strategy by reallocating funds among the available investment sub-accounts.
It's important to note that some policies may have specific guidelines or restrictions on the frequency of changes and may involve administrative fees. Regularly reviewing your policy with your insurance agent or financial advisor will help ensure your cash accumulation strategy remains appropriate for your evolving needs and market conditions.
How much should I be saving with life insurance?
To determine the amount to put into your Universal Life insurance policy's cash value account, consider your financial goals, how much money you have available for savings, what other savings options you have available, and risk tolerance. IUL and VUL policies offer premium flexibility. Higher premium payments can expedite cash value growth within guidelines, but affordability is key.
Seek guidance from an insurance agent or financial advisor to tailor premium payments to your needs. They'll assess your situation and guide you toward a suitable funding strategy.
How do I choose a Universal Life policy to fit my risk tolerance?
If you prefer steady growth with no potential for loss on your cash value, then an IUL policy is likely better for you. The cash value in an IUL policy follows the performance of a chosen stock market index (e.g S&P 500), but it does so with a floor on losses (typically 0%) and a ceiling on gains (typically 8-9%). This means you have the opportunity to achieve gains without the risk of losses in a downturn.
If you are less risk averse, then VULs can offer larger potential gains with the exposure to potential losses. This is because the cash value in a VUL is invested in sub accounts that function like mutual funds. The cash value in your policy fluctuates as these sub accounts do without the floor or ceiling of an IUL.
Check out Amplify’s Guide to Life Insurance for a helpful look at how different vehicles compare in terms of how they protect you and your loved ones, as well as how they can help build tax-efficient wealth
How can I adjust my coverage and payment over time?
Adjusting your Index Universal Life (IUL) or Variable Universal Life (VUL) coverage and premium payment over time is one of the key advantages of these policies. Here's how this works:
- Coverage Adjustment: With IUL and VUL, you can typically adjust your coverage amount up or down within certain limits. If your financial situation changes, such as having more dependents or paying off debts, you may want to increase your coverage to ensure your loved ones' financial security. Increases in coverage typically require underwriting. Conversely, if you have fewer financial responsibilities, reducing your coverage could lower premium costs.
- Premium Flexibility: These policies offer premium flexibility, allowing you to adjust the amount and frequency of premium payments. You can typically pay more than the required minimum premium to increase the cash value or pay less - even zero - if necessary due to financial constraints. However, be mindful of maintaining enough cash value to keep the policy in force.
Remember to review the policy's terms, any potential charges for changes, and the impact of adjustments on the cash value and death benefit. Working with your agent and a qualified financial advisor will ensure your IUL or VUL policy remains well-suited to your changing circumstances and long-term financial goals.
Why not just buy Term and invest the difference?
Term life insurance can be a useful tool in the short-term to ensure your loved ones will have financial support if you were to pass away. However, there are two main reasons why the “buy term, invest the rest” approach may not be the most advantageous approach to life insurance or your broader financial plan:
- Term life insurance does not cover you for the long run: As the name implies, Term life insurance is temporary. If you outlive your Term policy, all of the money you’ve paid in premiums is gone, and you’ll end up paying much higher premiums on your next policy if you still need coverage when the first Term policy expires. Think of it like renting vs. buying a house: if you ever want to buy a house, it’s best to get in sooner than later because it’s only going to get more expensive.
- You miss out on the tax-efficient wealth building opportunities of an IUL or VUL policy: Odds are whatever vehicle you choose for the “invest the rest” part of this approach will not provide the same tax-deferred growth or tax-free access opportunities that an IUL or VUL policy offers. These are powerful benefits that can significantly improve your financial flexibility.
It’s always best to consult with a qualified financial advisor when deciding on the best strategy for your financial goals. Many advisors default to the buy term, invest the rest approach because they believe they can generate better returns on your money than a permanent life insurance policy can. While that may be true, it’s important for you and your advisor to consider that they may still be able to manage the money in your cash value account depending on the type of policy you select.
FAQ
Grow Wealth
How does tax-efficient cash accumulation work in a life insurance vehicle?
When you pay your premium, a percentage of that money is used to cover the cost of your insurance and any fees associated with your policy. The rest of your premium is put into a savings account. Depending on the type of policy you have, the money in your savings account is invested either by the insurance company or you. Gains generated in the savings account grow tax-deferred and can be accessed tax-free if policy guidelines are followed.
Tax-efficient cash accumulation is a unique advantage of Permanent Life Insurance policies not available in Term Life Insurance policies. This tax-efficient growth is what makes cash-value life insurance an attractive option for those who have already maxed out contributions to other tax-deferred accounts like 401(k)s and Roth IRAs. To learn more, check out our Guide to Life Insurance.
What is "Account Value"?
The account value is the amount of money in the savings account tied to your insurance policy. It’s worth noting that account value and cash value can differ if your policy is still subject to surrender charges or if there is any outstanding loan debt.
What is "Cash Value"?
Cash value is equal to the account value minus any surrender charges or outstanding loan debt. If your surrender charge is $0 and you have no outstanding loan debt then the account value and cash value are the same.
How can I keep track of my account value? Is there an app?
Once the policy is issued, you will receive an annual statement which will indicate what your current cash value is at that time. You will also be able to contact the insurance company and request an inforce illustration, and that will show your projected cash value based on how your policy has actually performed by that point in time.
How does my cash value grow?
Cash value in Permanent Life Insurance policies grows through a combination of premiums and investment returns. There are different ways cash value can grow depending on the policy type.
- Whole Life policies have guaranteed fixed cash value accounts that grow according to the insurance company's terms (e.g. 3-5%). The policyholder has no control over how the cash value is invested.
- Indexed Universal Life (IUL) policies accumulate cash value based on returns linked to the performance of a stock market index. Policyholders can choose which index they want their cash value account to track.
- Variable Universal Life (VUL) policies invest funds in subaccounts that function similar to mutual funds, and the cash value grows or falls based on subaccount performance. VUL policyholders have full discretion over how their cash value is invested within the subaccount.
Each type of cash value product comes with varying risks and rewards. Learn more in our Guide to Life Insurance.
How much can I save? Is there a limit?
There is a limit to how much you can contribute to a cash value insurance policy, known as the "maximum premium." The limit is determined by the insurance company and is based on factors such as your age, health, and the type of policy you have. However, if you choose a higher death benefit, you may be able to contribute a higher amount of premium.
It's important to be aware of the maximum premium limit because exceeding it could cause the policy to lose its tax advantages and trigger gift tax implications. The maximum premium is the highest amount of money you can pay into the policy within a specific time period, such as a year or the life of the policy.
How can I contribute more to my policy?
You will need to speak with your carrier to change your monthly premium. Before you do, however, consult with your carrier on whether increasing your monthly contribution will have any negative impacts on your policy or financial goals.
What percent of the money I put into my policy goes towards cash value?
For a Term Life policy, 0% of the money goes toward cash value because Term policies don’t offer a cash value component.
For Permanent Life Insurance policies, that will depend on the following:
- The policy type
- The health and lifestyle of the individual who owns the policy
- How much money the policy owner puts into their policy on a monthly or yearly basis.
With all permanent life insurance policies, you have the option to change your death benefit, the structure of your policy, and the monthly premium to suit your financial goals. This means it’s possible to change the percent of money going toward cash value if needed.
Check out Building Wealth with Life Insurance in our Education Center to learn more.
How do I control where and how my funds are invested?
With an IUL policy you will need to work with your carrier to update how your funds are invested. With a VUL policy, you are in charge of allocating funds in your policy’s subaccounts. Your carrier should provide you with a way to manage your funds when your policy goes in force (becomes active).
What if my risk tolerance changes over time?
With an IUL policy, you are typically guaranteed a 0% floor on your annual interest. This means if the market takes a downturn, you will not lose any money in your policy. With a VUL policy, you have control over how your cash value is invested. The sub-accounts available to you with a VUL will likely have different options that work with different risk levels, but be sure you review those options before you activate your policy to ensure you have that flexibility when the time comes.
How often should I revisit my coverage or savings needs?
As often as you like. There may be some limitations to what changes you can make to your policy depending on the policy type, how long your policy has been in force, and the amount of cash value you’ve accumulated. That said, one of the main benefits of an IUL or VUL policy is the flexibility they offer. Amplify recommends consulting with a qualified financial advisor to determine if and/or when you may need to change your death benefit or contribution amounts.
Will my premium payments ever change over time?
Premiums for IUL and VUL policies are flexible. This means they can change over time, or you can keep them consistent. Here are a few things to keep in mind when considering whether to change your premium:
- Eventually the amount of money going toward your cash value will decrease. This is because the cost to insure you will go up, and the carrier will increase the amount they are charging for your policy’s face value.
- If you want to lower your premium amount, you will likely need to lower the face value of your policy. This reduces the risk posed to the carrier, and is something many people do when they get near retirement age because they have built up enough cash value to offset the decrease in face value.
- If you want to increase your premium to build more cash value, be sure to review the tax regulations associated with your policy to ensure you are not contributing too much.
Can I Stop Paying On the Policy At A Certain Age? Can I Skip Contributions?
Yes it is possible to stop paying your premiums at a certain age. The main thing to be aware of is whether you have built enough cash value that your returns are sufficient to keep the policy in force. If not, you will need to keep paying enough to cover your premium so the policy does not lapse.
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