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Life insurance is a financial product that allows the people we care about to be taken care of, pass away. No one can predict when our time will come. Most would agree that it will come at some point in time. Many can already understand and appreciate what life insurance does. Sad enough, many do not have enough coverage. It is important to keep in mind that, life insurance can be very affordable if you know what kind of life insurance to purchase. If you live paycheck to paycheck Florida life insurance can still be affordable. It is called Florida term life.

Term life insurance, is meant to cover a specific person for a set amount of time which you personally determine. For example, if you had twins that were 3 years old each, and you want to make sure that, in the case of your premature death, your children will have the funds to go to college, live in the same house, support their caregiver, etc. This policy will stay in effect for the term you select, however, it is usually 10 to 30 years.| Term life insurance can be a good tool in financially covering the ones you love. If you want to make sure your child has enough funds to pay bills, go to college, cover the mortgage, funeral expenses, credit card debt, this is a low cost policy that can help. Many are obtaining policies for less than $50.00 per month. Hard to beat that with a substantial amount of coverage. However, if nothing happens to you, no funds are returned to you. That is the primary difference between whole life insurance and term life insurance. NOTE: Some term life policies allow you to convert into a universal life policy.[/spin] A universal life insurance policy can help you if you make good money and do not mind the heavier premium compared to term insurance, why is the premium higher?[spin]

A Florida annuity has been proven with time to be effective since the concept first came to mind. Many are unaware what annuities are used for and the answer is simple. If you live in Florida, than a Florida retirement plan would welcome one. A Florida annuity is usually used for retirements. It is a contract with an insurance company that your money will grow a specific percentage each year. Many times, when you are nearing retirement, you want safety on what you have saved during the course of your life. Not risk it all in a volatile market.

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Universal life insurance is just one of several types of life insurance policy available through life companies today. Unlike term life insurance or mortgage (reducing) life insurance, universal life insurance gives your insurance policy a cash-in value, allowing you to withdraw funds accumulated on your universal policy as and when needed.

This flexible approach to life insurance is very popular in the US and offers a real alternative to standard term & mortgage life policies where the policyholder does not normally get to benefit directly from the life insurance funds, unless they are diagnosed as being terminally ill. Universal life insurance also provides policyholders with the ability to accrue interest on their life insurance premiums – something that a standard life insurance policy does not offer.

How universal life insurance works
Universal life insurance works in a similar way to a high interest long-notice deposit account. When an insurance premium payment is sent to the life company the company deposit the funds into an interest account after deducting a nominal expenses charge per deposit. The funds then gain interest, with interest accrued being credited to the account on a monthly basis. Each premium payment made of course increases the fund, while compound interest is earned on the account month upon month. The cost of maintaining the insurance product or products purchased through the universal insurance scheme are also deducted from the universal account on a monthly basis.

Should the insurance policyholder wish to withdraw funds from their universal life policy then they can do so from the cash surrender value of the life policy. Withdrawals are normally controlled / limited to a set number per year. Depending upon the policy provider there may also be caps on the amount of money that the universal life policyholder can withdraw and a stipulation on a minimum amount of funds that should remain in the universal life account.

It should go without saying that withdrawals from a universal life insurance policy will reduce the overall amount of funds available when a lump sum claim is made upon death or terminal illness diagnosis. It is therefore important to manage the universal life account to ensure that there is sufficient coverage for your family and dependants in the event of your death. If you don’t have the time to carefully manage a universal life product then you may end up with little to show for your life insurance premiums if and when a lump sum pay out is triggered.

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Term insurance provides coverage for a pre-specified period. For example, term insurance is designed to protect a mortgage or provide income for your family in case of your death. You pay the term insurance premium each month and as long as you pay the premium your policy will stay in force. Once the contract reaches maturity (usually in 10 years) you need to renew your policy at a higher price. If you die while you’re paying the premium your estate gets a large sum of money.

In contrast, permanent or whole life insurance remains in force until you die. You pay the premium on a monthly basis for a pre-specified term, which can range between 10 to 20 years. A portion of your monthly payment pays the insurance and the life insurance company that provided the insurance invests the remainder. Eventually you don’t pay any premiums but your estate still receives a large payment upon death.

Whole life polices have been criticized because their investment returns are low. Thus you were often advised to buy life insurance protection with a term policy and invest the difference between term and whole life payments in a separate investment vehicle, such as mutual funds, stocks, or bonds. Once you have built up a large pool of assets you don’t need the insurance because the assets will provide security and stability in the event of an unexpected death.

However, there is a new, more flexible product called universal life insurance. While the life insurance company controls the savings in a whole life policy, the savings in a universal life plan are owned and controlled by the policyholder. Insurance companies offer a large variety of investment options for this savings component, including mutual funds. Thus, you have the ability to meet your life insurance needs and increase your return on investment.

The major advantage of a universal life policy is tax-advantaged growth. When you pay the policy premium, a portion of the premium pays for the insurance and a portion is invested. However, when you are ready to withdraw the money from your investment, your cost basis ( the portion not subject to tax) is higher with a universal life policy. The cost base for a universal policy is equal to the sum of all your premiums – the amount of money you have invested plus the money you have used to buy life insurance. This is very useful because increasing your cost base will ensure you pay less tax once you sell your investments within the universal life policy.

Universal life insurance provides a powerful combination of life insurance and tax-advantaged investment opportunities. Investors should realize that universal life insurance premiums work twice as hard as other premiums. They should also know that choosing the right product is an important element in the overall success of this strategy. Finally, the benefits of this strategy are magnified if you are in a higher tax bracket.

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