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The Purpose of Universal & Whole Life Insurance Coverage

By April 6, 2023No Comments

At YMI Insurance, we are passionate about empowering you to take control of your future! We firmly believe that Universal and Whole Life Insurance policies are essential tools toward providing long-term protection that supports you and your loved ones. These policies provide not only long-term protection, but also a wide range of benefits that can help you reach your financial aspirations.

For example, whole life insurance doesn’t include a fixed term. Typically, you pay regular premiums until your passing, at which point the policy pays out. Occasionally, you may have the option to receive a lump sum payout while you are still alive, but this will reduce the death benefit payout. This type of policy is widely held because it combines a savings account with a death benefit.

Universal life insurance operates similarly to whole life insurance, but with the added benefit of increased flexibility in accessing your funds. This type of policy allows you to withdraw funds or take out loans against the cash value component, with the option to repay the loan later on. It is important to note that if there is an outstanding loan balance at the time of your death, it can significantly impact the death benefit payout of the policy.

Long-Term Protection

The primary goal of Universal and Whole Life Insurance policies is to provide long-term protection for you and the people you love. These policies are designed to pay out a death benefit to your beneficiaries upon your passing. This death benefit can be used to pay for final expenses, outstanding debts, and other financial obligations.

Whole Life Insurance policies are particularly valuable for this purpose because they provide coverage for your entire life. This means that as long as you continue to pay your premiums, you will have the peace of mind that comes with knowing that your loved ones will be taken care of financially when you pass away.

Accumulating Cash Value 

Another important benefit to Universal and Whole Life Insurance policies is the accumulation of cash value. Each of these policy types have a cash value component that accumulates over time as you pay your premiums.

Universal Life Insurance policies offer more options in terms of premiums and death benefits, and they allow you to modify the amount of coverage and the premium payments to better support your lifestyle. The cash value in a Universal Life Insurance policy grows tax-deferred, which means that you don’t have to pay taxes on the growth until you withdraw it.

Whole Life Insurance policies, on the other hand, offer a guaranteed rate of return on the cash value component, which means that you know exactly how much your policy will be worth over time. Additionally, the cash value in a Whole Life Insurance policy grows tax-deferred, and you can borrow against it or withdraw it if you need to.

Estate Planning

Finally, Universal and Whole Life Insurance policies can be valuable tools for estate planning. When you pass away, your estate may be subject to estate taxes, which can eat into the assets that you leave behind for your beneficiaries.

One way to mitigate the impact of estate taxes is to purchase a Universal or Whole Life Insurance policy and name your beneficiaries as the policy’s beneficiaries. Because the death benefit from these policies is paid out tax-free, your beneficiaries can use the proceeds to pay any estate taxes that may be due without having to dip into their own resources.

Universal and Whole Life Cover at YMI Insurance

Both Universal and Whole Life insurance policies serve several important purposes, and at YMI Insurance we are dedicated to helping our clients understand the benefits of these policies and how they can be used to achieve their financial goals. If you have any questions or would like to discuss your insurance needs, please don’t hesitate to contact us today!

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