The only way a UL turns into a temporary insurance policy is by not continuously increasing the premium payments so that you can "keep up" with the increasing costs associated with it. Which, if they do indeed always pay the same amount of premium and it cancels (becomes a temporary policy

), there is absolutely no return of premium associated with it because all the cash value was eaten up by the difference between what the customer paid and what they should have paid.

quote:
Whole life is if you want permanent insurance and access to the cash value without jeopardizing the permanent insurance

If you buy a whole life policy so that you can access the cash value one day in the future, you are indeed jeopardizing the permanent nature of the policy. Only way you don't is if you actually do pay back all the loan balance and associated interest. As long as a whole life policy has a loan balance, the permanency of the policy is jeopardized.

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Posted by TDsngumbo

Alpha Silverfox

Member since Oct 2011

41925 posts

Posted on 8/3/22 at 11:51 am to TDsngumbo

To add to my above post, I'll reiterate that the best type of life insurance for 99% of the population out there is term. There are a few instances where a whole life policy would be appropriate (neither of them involve the use of the cash value component, though) but the vast, vast majority of the American population would be best served by purchasing a term policy and investing each month. Universal Life policies are pure shite. An agent selling a UL policy as a "permanent" policy is like a financial advisor selling an investment by saying "buy this mutual fund and only invest $25 a month. it'll always be worth something and would certainly never, ever decrease in value -- even if you decide to stop investing in it for a while. but be careful, if you always put only the $25 I'm advising you to invest each month, you may find a time when this investment won't be worth a dime so be sure to increase the amount you invest each month"

Customer: "but I thought you said I always only have to put $25 each month and I'll never lose money"

Advisor: "right, it'll always be there for you as long as you're investing $25 a month but it might not be worth anything one day if you only invest $25 a month".

It's the same damn thing. UL's are a scam - even more so than whole life - for 99% of those who buy them.

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Posted by meansonny

ATL

Member since Sep 2012

25999 posts

Posted on 8/3/22 at 4:50 pm to TDsngumbo

quote:
quote:
If someone wants permanent insurance, UL is exponentially better than whole life

That would be true if UL was actually permanent. Whole life is more permanent than UL.
quote:

Incorrect. There are UL policies with guarantees. There isn't anything more permanent than a guarantee (for whole life or UL... it is the same thing).

quote:
quote:
If someone wants temporary insurance with a return of premium, it is exponentially better than whole life

The only way a UL turns into a temporary insurance policy is by not continuously increasing the premium payments so that you can "keep up" with the increasing costs associated with it. Which, if they do indeed always pay the same amount of premium and it cancels (becomes a temporary policy ), there is absolutely no return of premium associated with it because all the cash value was eaten up by the difference between what the customer paid and what they should have paid.

You are way off because you evidently have never seen a decent UL (with guarantees).
The way a UL becomes temporary is when the insured cancels the policy to pull all of the cash out of it.
ULs grow cash value better than Whole Life policies. The kick in the nuts is that the UL will lapse if you use the cash value (this is what you are insinuating).
Thus... the purpose of the UL is to provide temporary life insurance until the insured wants to utilize the funds in the policy. Again... the funds in the UL grow/accumulate faster than whole life because the policy does not guarantee to be permanent when the funds are drawn. That is the tradeoff and why whole life is so much more expensive and why whole life accumulates growth slower than ULs.

quote:
If you buy a whole life policy so that you can access the cash value one day in the future, you are indeed jeopardizing the permanent nature of the policy. Only way you don't is if you actually do pay back all the loan balance and associated interest. As long as a whole life policy has a loan balance, the permanency of the policy is jeopardized.

This is true. But the loan does not require to ever be paid back. Interest payments can be made with no payment down on the loan and the life insurance is still permanent.
ULs use the cash value to sustain the annual renewable term nature of the universal life policy and that is why withdrawing funds is so dangerous down the road if you still need to have life insurance coverage for your family.

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