Whole Life and Univeral Life - Death benefit + Cash Value payouts?

Question

I have read so many great questions and answers regarding WL vs Term; UL vs Term......depending on each person's financial plan/goal, all fingers point to Term..."invest the rest."

My question is about the death benefit. All that I've seen is WL and UL only pays the DEATH BENEFIT and the insurance company KEEPS THE CASH VALUE PORTION.

Is that TRUE? Also, aren't there some UL/WL policies that pay BOTH death benefit and cash value?

Obviously the premiums would be higher. Please give me some insight to this matter. I ask only to be educated as I have friends and family that don't know any better than me and know friends and family that have bought/"persuaded" to buy WL or UL policies.

Thanks in advance.

Answer 1

you have it correct.  a WL policy is actually a series of guaranteed renewable term policies of declining amount, coupled with a savings account [the cash value] that grows over time.  The DB is fixed and includes both the term insurance and savings account [cash value].

dividends, if you get them, add either more cash or more insurance (or both).

UL is more complex ... I believe that the minimum guaranteed portion of the cash value is part of the death benefit but that, if the "investments" do super well, the actual policy payout may be more than the DB.

and this may depend on the company and policy as well.

***

the various state insurance commissioners require life companies to invest in "appropriate" securities .. which means they have a portion in bonds and mortgages.

alas, bonds and mortgages tend to underperform the stock markets over very long periods [decades] and thus buying term [which has the cheapest sales commissions as well] and investing the difference in mutual funds usually works out better for most middle class people.

does this help?

Answer 2

UL policies have two options, A & B.  You choose which one you want when you take out the policy.  

Option A is DB only.  Option B is DB + Cash Value.

The choice you make will determine how fast your CV grows.  Option A will grow the CV faster and will give you more to borrow against or use before your death.  Option B is recommended for those who will don't see themselves needing to use the CV before their death.

Answer 3

you should go for endowment plan limited premium with profit and you will get extended permanent disability and death benefit by accident or natural,In case of maturity you will get basic insurance amount plus bonus and additional bonus if any...