With permanent life insurance you can enjoy a worry free retirement knowing that your policy will provide money for burial, to pay capital gains tax, provide funding to an organization you care about, or to leave an inheritance for your children or grandchildren.
This type of life insurance offers fixed guaranteed premiums, limited premium payment period, lifetime coverage, and optional cash accumulation.
What are the different types of Permanent Life Insurance?
With a tax-advantaged savings component that allows you to benefit from the insurance companies prudent management of the invested premium dollars, Par Life Insurance is an attractive vehicle as part of a well diversified investment portfolio.
Participating life insurance offers:
- Tax deferred growth.
- Guaranteed premiums, death benefit and cash surrender values.
- Policyholder dividends. Dividends are not guaranteed and are a return of a portion of the premium each year after the insurance company accounts for death claims paid out, investment returns on the participating fund, and expenses to manage the fund. They allow the policy owner to participate in the financial results of a well managed life insurance company. There are a number of options for how the dividends are used.
- Other riders and benefits can be added to the basic policy.
- Tax free supplementary retirement income.
Flexibility is the key word that differientiates UL from other permanent life insurance policies. This type of policy separates the insurance and cash value component. The cash value is essentially a tax deferred account where premiums are deposited and the costs of the policy withdrawn.
The fleixble options include:
- Varying cost of insurance options - yearly renewable term, 10, 15, 20, or life pay
- The ability to increase or decrease insurance amounts as needs change
- Multiple life coverages - for spouse, children, business partner etc.
- The ability to change the premium, make lump sum deposits, stop paying altogether
- Riders such as term life and critical illness can be added
- Universal Life insurance offers the ability to shelter non-registered assets from tax.
- The policy account value grows tax free within the contract.
- Upon death it is paid out tax free along with the life insurance amount.
- It is also accessible to provide tax free supplementary retirement income.
Universal Life is an excellent vehicle for tax free intergenerational transfer of wealth. If you have assets that you know you will not need for income purposes in your lifetime, why pay tax on the investment income. You can shelter that money in a life insurance policy and have it pass tax free to beneficiaries.
It is an excellent mechanism to remove surplus cash from corporations tax free upon death using a technique known as the Corporate Estate Transfer. Ask us for more details as to how Universal Life Insurance may be used to maximize estate values for your intended beneficiaries.
Investments Within UL Policies
There are many investment options in a UL policy including:
- Daily Interest Option (DIO) providing liquidity
- Guaranteed Interest Option (GIO) - 1,2, 3, 5, 10 years or longer at compound rates of return
- Variable Interest Account (VIO) - mutual fund and market index linked accounts - some companies have over 400 different VIO's
These types of permanent life insurance policies provide guaranteed coverage and premiums.
Term to 100 is a permanent life insurance policy with a fixed guaranteed premium and lifelong coverage. There is no savings component and premiums are required until age 100 or prior death.
20 Pay Life insurance policies are similar except that the policy is paid up after 20 years. Guaranteed cash values begin after a certain period such as 10 years. If you cash it in at that point you can get some of your premiums back, After 20 yerrs no further premiums are required. You can cancel the policy at any time and the guaranteed cash value is yours to keep.
Optional riders and benefits can customize these plans to your needs.