Why Universal Life Insurance
Universal Life Insurance (popularly referred to as UL) is among the more lucrative products offered by Jack Bendahan one of your Toronto life insurance providers. Universal life insurance also includes investment component and it entails cash accumulation. However, there are nuances to be understood, and this is what necessitates communication with an knowledgeable Toronto life insurance broker.
Life insurance, according to the average citizen who has had no reason to delve into the subject, is just a method of protecting one’s family in the unfortunate event that the insured is victimized by death. However, on a minimal amount of research, you will understand that there is much more to life insurance than just financial protection and the various types of life insurances that accord protection.
Universal Life Insurance Components
Universal Life Insurance is a policy that also doubles as a form of investment used as as a method of tax protection, and it is this aspect of UL that attracts consumers. This insurance is further subdivided into two forms: Yearly Renewable Life insurance (YRL) and Term 100. At a superficial glance, both the options come across as being quite similar as both the forms require the policy owner to pay the same premium amount every month till the insurance matures. However, on closer inspection, you will notice that there is a marked difference between the two. The amount paid as premiums are divided into two parts – one is used for keeping the insurance going known as the cost of insurance, and the other is excess cash used used for the investment portion. In Term 100, the division of the premium as proposed at the get-go is maintained as level till the time the insurance matures at age 100. On the other hand, in the case of YRL, the amount set aside for keeping the insurance going rises with age. This translates to minimum investment towards the end of the insurance, as you get older and could quite possibly mean higher premiums needed to keep the policy going.
It is advisable for one to choose Term 100 over YRT as insurance costs increase as you age in the case of the latter. A reliable, professional Toronto life insurance agent such as Jack Bendahan of Lifeman.ca will take the time to enlighten you about such nuances, and this is why you need to exercise caution while dealing with insurance providers.
Universal life insurance also comes handy when settling inheritances after the demise of the insured. As UL is a form of investment, the insurance is counted among the property to be divided among the survivors of the deceased, thereby easing the process. The investment portion of the insurance is paid out to the beneficiary tax free upon death.
Universal life insurance can also be taken out by an employer to insure a key employee. The employee becomes the insured and the employer, the policy owner. There exist different variations of this agreement. The employer can choose to pay the premiums on the policy by listing them under the category of company expenses while the employee pays the taxes on the premiums. Or the employee can pay the premiums himself, but the company remains the policy holder and thus controls the usage of the benefits. Such policies are drafted to protect a company from economic or administrative losses that the employer may incur on the death of the key person.