Indexed universal life insurance is often pitched as a cash value insurance policy that benefits from the market’s gains–tax-free–without the risk of loss during a market downturn. Universal Life Sales sales … Life insurance comes in different flavors and shapes -- and some of them are taxable. There are so many types of life insurance to choose from, it can be tough to keep them all straight. In addition, indexed universal life policies can offer tax-free growth on your investment gains. A whole life insurance policy’s cash value grows tax-deferred, which is why it’s often compared to a retirement account, such as a 401(k) or IRA. I think term life makes way more sense for most people. Indexed universal life also builds up cash value, which is money you can take out and spend while you are alive. A portion of the universal life insurance monthly premium is put into the cost of the life policy which will provide the death benefit to your beneficiary and another portion of the premium is invested so it can be used as investment savings. The investment gains from a Universal Life Policy usually go toward The Cash Value Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? Since indexed universal life insurance is a type of universal policy, the amount you need to pay each month isn’t fixed. Universal life insurance is permanent life insurance with an investment savings element and low premiums like term life insurance. Overview of Canadian taxation of life insurance policies . Whole and Universal life insurance fall into the same category—Permanent life policies. And there may be flexibility to adjust your premium payments and death benefit, depending on the policy. The investment gains from a Universal Life Policy usually go toward the cash value What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? Some types even have subvarieties. He did the usual fussing over how universal life was so much better: the tax-free benefit, the cash component, the nest egg for your heirs, etc, etc. Steven Elwell: Whole life insurance can come with high premiums and high investment costs when dealing with variable universal life insurance. A Universal Insurance policy can be very complicated. There are so many options and variables that the average person prefers a straight-forward term policy – or so is the common belief. Life insurance plays an increasingly important role in financial planning due to … About the flashcard: This flashcard is meant to be used for studying, quizzing and learning new information. As you continue to pay premiums on your policy, the cash-surrender value will increase steadily. Indexed universal life policies provide greater upside potential, flexibility, and tax-free gains. rules summarize grandfathering in respect of the accrual taxation rules and exempt testing for life insurance policies: January 2015 . Universal Life Insurance Sales changes. Some people choose to put lump-sum amounts into their universal life (UL) polices. You get to decide how much you can pay each month, usually with a … As stated previously, the cash-surrender value of a life insurance policy is the amount of money you will receive if you decide to redeem your policy for cash prior to your death. However, some require a single premium (single lump-sum premium) or fixed premiums (scheduled fixed premiums). When a policyholder decides it is time to begin withdrawing investment funds (generally around retirement age), the funds are taken out via policy loans tax-free . I remember having a discussion with an insurance salesman recently. However, contributions to the whole life insurance policy are not tax deductible, as they are with retirement accounts.