Universal Life Insurance
Universal Life insurance can potentially meet your insurance needs now and in the future, because it adapts as your lifestyle and financial expectations change. Universal life insurance products all provide the following:
- Flexible premiums allow you to increase or decrease regular payments.
- Death benefits provide constant protection for you and your family, provided premium payments are made.
- Competitive interest rates increase cash values with tax-deferred dividend accumulation.1
- Partial withdrawals and policy loans give you convenient access to your cash values.2
- Low mortality charges keep your insurance costs down.
Several options and plans strengthen your policy.
- Future purchase options allow you to buy extra insurance without proving insurability.
- Enhanced protection feature buys term insurance to keep your initial costs down while providing your required death benefit.
- Waiver of monthly deduction option dismisses expenses and mortality charges if you become disabled.
- Inflation-fighting cost of living rider increases your death benefit without proving your insurability.
- Additional protection will provide term insurance for the insured’s spouse, child, or non-family member.
The concept of universal life insurance is easy to understand. It works like this: You put in money by paying a premium. A charge is deducted from your regular premium payments, and the balance goes into your policy’s cash value.1 This cash value then grows — tax deferred — because interest is added to the policy’s cash value at the current interest crediting rate. The interest rate may fluctuate with the market, but it will never be lower than the guaranteed rate. It’s the goal to credit rates which compare favorably with those of other interest-sensitive products. The end result? The protection of a tax-free life insurance death benefit with the benefits of tax-deferred dividend accumulation.1
Life insurance remains one of the few ways to defer taxation of current interest earnings.
1) Income and growth on accumulated cash values has been held by the Tax Court to be generally taxable only upon withdrawal. Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59½ may be subject to a 10% penalty.
2) Proceeds from an insurance policy paid because of the death of the insured are generally excluded from the beneficiary’s gross income for tax purposes. Tax free income is achieved by withdrawing from the policy cash value an amount equal to the total premiums paid (cost basis), then using policy loans for the balance. Outstanding policy loans at death, and withdrawals, will reduce the policy death benefit and cash values. If the policy is allowed to lapse with a loan outstanding, the amount of the loan in excess of your cost basis will be taxable as ordinary income to the extent of the gain in the policy and may be subject to a 10% income tax penalty prior to age 59½.
Please note that neither the Omni Group, LLC nor any of its agents or representatives give legal or tax advice. For complete details, consult with your tax advisor or attorney.