The Best Universal Life Insurance Policy

Heavenly | Oct 12, 2010 |

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The best universal life insurance policy (UL) should have the following features: minimal administrative fees, a cash value that is competitive with the market rate, and the insurance component of the policy should be level term, not increasing term. Also, the commission fee for the agent should be low, otherwise your cash value will remain zero in the first few years of the policy.

Sounds complicated? Let me simplify it and make it easy for you--buy term life insurance. You will get no administrative fees, your cash value is your own investment in the market, and the insurance cost won't increase every year. You get the best of the best, and since the money is in your own hands, you can control it and take good care of it. There is no commission expense for the agent because you can buy your term life insurance online.

Does this sound extreme? The conventional way is designed by the establishment, so the money also goes toward the establishment. Did you know that decades ago, the life insurance industry was threatened by companies that primarily sold term life insurance, and by the strategy of "Buy Term Invest the Difference", so much so that they had to come up with a new plan that shut the mouths of credible experts who called for the "Buy Term..." strategy. To answer the threat, they came up with the Universal life insurance plan, which has an investment component and a term insurance component within it.

This, they call it their own "Buy Term Invest the Difference", but it is an altered version which will lead to a totally different result. If you use the original strategy, you will buy the cost effective term insurance, and invest the money you save into your retirement fund, and then after decades you will be able to insure yourself. Whereas clients who buy the UL insurance plan will still be paying for their policies after they retire, and insurance costs will have increased drastically, so that most clients won't be able to afford it and the company will withdraw cash from the investment component to pay for the cost, until the fund runs out and the policy lapses.

This newer insurance product didn't answer the real needs of customers, but in fact, gave many costumers problems. There were many cases in which the policy lapsed because the client couldn't afford the increasing cost. The insurance contract states exactly the cost of administrative fees, the increasing rate, and the content of the investment. Most clients would forget it few months after they bought it, and never read it. When the agents sell these types of policies, they usually present the initial administrate fee, which is subjected to change and increase, and the lowest initial insurance cost at the beginning. They will also show the clients the most optimistic return possible for the investment inside the policy. Most clients who had received a presentation from their agents without doing independent research would feel good about the plan and only find out the problems years after.

The best Universal life insurance policy is term life insurance! It's like saying the best apple is an orange, but it's true when it comes to life insurance. The term policy is the best policy.