No Lapse Guaranteed Benefit Universal Life Insurance
The primary disadvantage of universal life insurance is that it can lapse if the cash value is depleted. No lapse guaranteed benefit universal life insurance is a hybrid of whole life insurance and universal life and does not tie the validity of the policy to the cash equity held by the insured person. Even if there is no cash value built in the policy, the death benefit remains in effect.
Whole Life Insurance vs. Universal Life Insurance
Whole life insurance has fixed premiums which must be paid every month, while universal life insurance deducts premiums from the cash value of the policy. Insured persons may pay universal life premiums whenever they wish and the premiums are added directly to the cash value. Whole life insurance is permanent and will not lapse if premiums are not paid, while universal life insurance will lapse if the policyholder’s cash equity reaches zero.
What Happens If The Policy Lapses
If a universal life insurance policy lapses, the policyholder is left with no life insurance and must obtain another policy. The premiums on a new policy will be higher since the individual will be older. Whole life insurance only lapses if the insured person chooses to remove the cash value from the policy or if he or she fails to pay the premium.
No lapse universal life insurance offers the benefit of permanent life insurance with lower fixed premiums than whole life insurance. However, consumers do have the option of adding a no-lapse guaranteed benefit rider to any type of life insurance policy for an additional fee.
Pros and Cons of Guaranteed Benefits Universal Life
Like whole life insurance, no lapse guaranteed benefit universal life insurance is permanent and will not be cancelled by the universal life insurance company. While the cash value of whole life insurance increases over time, the cash value of universal life is invested in riskier financial instruments and may suffer losses. The fixed rates on universal life insurance are lower than those of whole life insurance policies with the same death benefits, allowing those with lower budgets the advantages of permanent life insurance coverage.
Universal Life Insurance Quotes
For those who prefer the investment risks of universal life insurance but need the security of permanent life insurance, universal life insurance may provide the perfect answer. A universal life policy provides permanent coverage at affordable rates and offers the possibility of greater returns on cash value than whole life insurance. Compare universal life insurance quotes to find the best universal life insurance available from companies.
By entering your zip code, TheLifeInsuranceQuote.com will provide free, instant universal life insurance quotes, allowing you to save money when you purchase life insurance.
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