Question 1

What is universal life insurance?

Accepted Answer

Universal life insurance is a type of permanent life insurance policy that offers a death benefit along with a savings component. It provides flexibility in premium payments and the potential to accumulate cash value over time.

Question 2

What is survivorship life insurance?

Accepted Answer

Survivorship life insurance, also known as second-to-die life insurance, is a policy that covers two individuals and pays out the death benefit after both insured parties have passed away. It is often used for estate planning or to provide funds for beneficiaries after the death of the second insured person.

Question 3

What is the difference between universal life insurance and survivorship life insurance?

Accepted Answer

The main difference between universal life insurance and survivorship life insurance is who is covered and when the death benefit is paid out. Universal life insurance covers an individual and pays out the death benefit upon their death, while survivorship life insurance covers two individuals and pays out the death benefit after both insured parties have passed away.

Question 4

Can you explain the savings component of universal life insurance?

Accepted Answer

Universal life insurance policies have a cash value component that allows policyholders to accumulate savings over time. A portion of the premium payments goes towards the cash value, which can grow on a tax-deferred basis. Policyholders can often access the cash value through loans or withdrawals.

Question 5

What are the advantages of survivorship life insurance?

Accepted Answer

Survivorship life insurance can be advantageous for estate planning purposes, as it can help cover estate taxes or provide funds for beneficiaries. It is often used when one or both insured individuals may have difficulty obtaining individual life insurance policies due to health or other factors.

Question 6

Can the death benefit of survivorship life insurance be used for other purposes?

Accepted Answer

Yes, the death benefit of survivorship life insurance can be used for various purposes. While it is commonly used for estate planning, the funds can also be used to provide for dependents, pay off debts, or leave a charitable donation. The flexibility of the death benefit usage depends on the policy terms and the specific needs of the insured parties.

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