Universal Life Insurance: What it is, How it works | Guardian

This article is for informational purposes only. guardian may not offer all products discussed. consult with a financial professional to understand what life insurance products are available for sale.

1 There are two types of permanent life insurance: whole life and universal life. Cash value grows in a participating whole life policy through dividends, which are declared annually by the company’s board of directors and are not guaranteed. Cash value grows on a universal life policy through interest credited and lower insurance costs. The cash value of both policy types benefits when the policyholder pays more than the required premium.

2 Universal life insurance can lapse prematurely due to inadequate funding (low or no premium), increased cost of insurance rates as the insured ages, and a low credit interest rate. this does not apply to universal life policies that have a secondary guarantee, but if the secondary guarantee requirements are not met, the policy will most likely lapse.

3 All permanent life insurance policy warranties are subject to timely payment of all required premiums and the claim-paying ability of the issuing insurance company. Policy loans and withdrawals affect collateral by reducing the policy’s death benefit and cash values.

4 guardian, its subsidiaries, agents and employees do not provide tax, legal or accounting advice. consult your tax, legal, or accounting professional regarding your individual situation.

5 Some life policies have no cash values ​​in the first two policy years and do not pay dividends until the third policy year. talk to your financial representative and refer to your individual life policy illustration for more information.

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6 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and interest on loans. withdrawals above the cost basis may generate taxable revenue. If the policy expires or is surrendered, any outstanding loans that are considered gains on the policy may be subject to ordinary income taxes. If the policy is a modified endowment contract (MEC), the loans are treated as withdrawals, but first as earnings, subject to ordinary income taxes. If the policyholder is under age 59½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

7 A variable universal life (vul) policy is considered both life insurance and a security and is sold with a prospectus. premium and death benefit rates are flexible. your credit rate is based on the performance of the underlying investment options provided in the policy. there is no guaranteed interest rate. This type of policy can lapse due to poor or negative performance of the underlying investment options, inadequate financing, and increased cost of insurance rates. see your policy prospectus for more information.

Park Avenue Securities LLC (Pass) is a wholly owned subsidiary of Guardian Life Insurance Company of America (Guardian). pas is a registered broker-dealer offering competitive investment products, as well as a registered investment adviser offering financial planning and investment advisory services. pas is a member of finra and sipc.

Variable insurance products, their underlying investment options, mutual funds and ETFs are sold by prospectus only. prospectuses contain important information, including fees and expenses. Please read the brochure carefully before investing or sending money. You should carefully consider the investment objectives, risks, fees and charges of the investment company before investing. Contact your investment professional or call 888-600-4667 to obtain a prospectus, which contains this and other important information.

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annuities and variable life insurance issued by the guardian of insurance & annuity company, inc. (giac), a delaware corporation. individual variable annuities are distributed by country. giac is a wholly owned subsidiary of guardian. guardian, giac and pas are located at 10 hudson yards, new york, ny 10001


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