| Life insurance is generally
thought to only be used in the case of death. However,
you can actually use some life
insurance funds while you are still alive.
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.
Therefore, 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). 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.
Universal life insurance premiums work twice as hard
as other premiums. Choosing the right product is an
important element in the overall success of this strategy.
Talk to your life
insurance agent about what choice is best for you.
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