With universal life insurance, you can buy in up-front by putting a significant sum into your account, which allows your cash value to increase more because your account is starting at a higher level. Prepaying also allows you to lower your premiums because the accumulated cash value is earning more, which means that more of your earnings can contribute to the cost of the insurance. On the other hand, prepaying also means that you must take a lump sum of cash from somewhere.
Is prepaying for you? Not likely, unless you really want insurance but can’t afford monthly payments. People have generally used prepaid insurance as an investment to build cash value without incurring any tax consequences. But with IRAs, Roth IRAs, and 401(k)s, chances are you won’t be interested in this option.
Is prepaying for you? Not likely, unless you really want insurance but can’t afford monthly payments. People have generally used prepaid insurance as an investment to build cash value without incurring any tax consequences. But with IRAs, Roth IRAs, and 401(k)s, chances are you won’t be interested in this option.
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