Universal Life Insurance & Estate Planning From United of Omaha Life Insurance Company or Companion Life Insurance Company
Estate planning can be a time-consuming and complicated process for many individuals. There are multiple strategies and tools available for passing your wealth on to your heirs, all with their own specialized functions. Universal life insurance is an instrument for estate planning, because of the flexibility and tax advantages these policies offer. In this article, we will explore the ways universal life insurance policies can be used during the estate planning process.
How Universal Life Insurance Works
Universal life insurance is similar to whole life insurance in that both are permanent life insurance policies which last until you die (or reach a specified age - such as 100 or 120, at which point you receive the death benefits). The coverage cannot be canceled unless you fail to make payments.
A universal life insurance policy also serves as a conservative wealth accumulation vehicle. Guaranteed interest rates help your money grow in the form of cash values while helping protect the future of your family.
How Does Universal Life Insurance Help with Estate Planning?
Since death benefits from universal life insurance policies are paid to the beneficiary they are a popular tool for estate planning. Leaving a lump-sum inheritance can be problematic - often, heirs may be forced to pay high taxes on the money you've left them. Placing money in the universal life insurance policy is not only a way to grow your money; it's potentially a way to transfer it to your beneficiary without the tax issues.
The combination of cash value accumulation and death benefits paid to heirs, foundations, charities and non-profit organizations is appealing for estate planning purposes. In addition, the premiums on policies used for this purpose can be affordable. Our Legacy Single Premium Universal Life Insurance policy (Legacy SPL) - features a single premium payment. There is a $5,000 minimum payment - but no ongoing payments. The size of your single premium payment depends on the amount of benefits you wish to provide to the beneficiary.
Universal Life Insurance Policy Estate Planning Options
Legacy SPL is our single premium universal life insurance option can work well for estate planning purposes. The death benefit is paid to your heirs, and the policy features tax-deferred growth and a single premium payment. Legacy SPL works for some estates, and transfers assets upon the death of the insured.
Our Guaranteed Universal Life Survivor insurance policy offers what is commonly known as second-to-die life insurance. With this policy, many of the benefits of other universal life insurance policies are included. However, the policy does not pay a death benefit until both partners have died. This is commonly used by parents for estate planning and transferring wealth to their children.
Talk to your local licensed insurance agent for more information on using universal life insurance policies for estate planning purposes. They can help you assess your current financial situation, needs in retirement, and advise you on the way to approach your estate planning.