Secure Your Legacy: Explore Universal Life Insurance

High-value life insurance designed for the unique needs of high-net-worth individuals.

What is Universal Life Insurance?

Universal life insurance is a Long Term Life Insurance which offers substantial coverage amounts, typically ranging from $1 million to $150 million, with most policies falling within the $5 million to $20 million range. This specialised insurance is designed to seamlessly integrate into the wealth management strategies of high-net-worth individuals.

Universal life insurance can be a valuable tool for:

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Wealth Distribution:

Safeguard your assets and ensure a seamless transfer to your beneficiaries. Minimise tax implications and protect your family’s financial future.

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Succession Planning:

Facilitate a smooth business transition within your family, preserving its value and ensuring its continued success while maintaining harmony among family members.

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Estate Planning Protection:

Cover potential estate taxes and ensure your wishes are met, providing peace of mind for you and your family, and safeguarding your assets from unforeseen circumstances.

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Charitable Giving:

Leave a lasting legacy by supporting causes you care about, maximising your tax benefits while making a positive impact on the community.

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Retirement Planning

Secure your financial future and design a comprehensive retirement plan. Universal life insurance can serve as a cornerstone of your retirement strategy, providing a substantial asset to support your desired lifestyle.

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Fixed Withdrawals:

Enjoy the peace of mind that comes with predictable cash flow. By opting for fixed withdrawals after a specified period, typically 10 years, you can create a steady income stream without depleting your policy's value prematurely.

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Retirement Income:

Generate a reliable and potentially tax-efficient income stream to supplement your pension or other retirement savings. Universal life insurance can offer a flexible income source to meet your ongoing expenses.

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The Value of Universal Life Insurance

For high-net-worth individuals seeking high-yielding investments, universal life insurance presents a compelling option. Not only does it provide lifelong life insurance coverage, it also offers the potential for a return on your invested premiums.

Universal life insurance becomes especially valuable when it comes to estate planning. The payout can cover any estate taxes or duties that may arise, particularly in jurisdictions with inheritance taxes. This ensures a smooth transfer of wealth to your loved ones without unnecessary financial burden.

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How Universal Life Insurance Works

Universal life insurance goes beyond traditional life insurance by functioning as an investment vehicle. It offers an encashment value, which means you can access a portion of the policy's value if you decide to terminate the policy before your passing.

Universal life insurance is an index-linked insurance policy with a guaranteed minimum growth per annum.

The encashment value is calculated based on two factors:

  • The investment returns generated on your premiums.
  • Any applicable termination fees.

Universal life insurance offers flexible premium payment options. You can choose to pay a single, large sum upfront or opt for a series of smaller payments spread out over time.

FAQs

What is Universal Life Insurance?

Universal Life Insurance: A Comprehensive Solution for High-Net-Worth Individuals

Universal life insurance, also known as Long Term Life Insurance (LTI) by the DFSA, provides high coverage amounts in excess of $1 million. It is designed for high-net-worth individuals and integrates seamlessly with your wealth management strategy to address estate planning, wealth transfer, and other financial goals.

How is Universal Life Insurance Different from Traditional Life Insurance?

Traditional life insurance typically offers lower coverage limits. In contrast, universal life insurance goes beyond a pure death benefit, functioning as an investment vehicle with the potential to grow your premiums over time.

What are the Benefits of Universal Life Insurance?

  • High Coverage Amounts: Ensures your beneficiaries are well-provided for.
  • Investment Potential: Grow your wealth alongside your coverage.
  • Estate Planning Tool: Covers estate taxes for a smooth inheritance.
  • Flexible Payment Options: Choose a payment plan that fits your financial goals.
  • Wealth Management Integration: Seamlessly integrates with your existing strategy.
How Universal Insurance Investment Works?

Where your money is invested depends on the kind of universal life insurance policy you choose:

  1. Fixed universal life insurance: When you sign up for this, you agree to the insurer’s fixed rate of return. Your cash goes into an account that earns this fixed rate of interest year after year.
  2. Index universal life insurance: The invested premium in this kind of policy goes into an account. The returns from this account are linked to stock market returns through popular high-performing indexes. One of the most remarkable features of this kind of policy is that you are guaranteed against stock market losses – but your gains are capped at a pre-determined rate as well.
Who Needs Universal Life Insurance?

HNWs are typically the target market for these policies because of the high premium amount, and also because of the kind of gains and wealth structuring advantages it offers.

As a high-yield investment opportunity, universal life insurance policies can be attractive. However, it is important to consider your goals and objectives and choose the right kind of policy for your needs. Not every policy is created equal, and depending on your appetite for risk, you need to carefully consider which type of insurance is suitable for your portfolio.

How Do I Qualify for Universal Life Insurance?
Qualification depends on factors like your income, net worth, health, and desired coverage amount.
Benefits and Risks of Universal Life Insurance

There are many benefits a universal life insurance brings – but depending on your portfolio and need, you need to be discerning in the policy you eventually choose.

  1. Creates liquidity
  2. Compensates for inheritance tax
  3. Provides security to complex cases of succession planning
  4. Presents a valuable option for diversifying your portfolio

The advantages are clear – it’s an exclusive opportunity for high levels of death benefit whilst also having your money working for you in a safe and secure environment.

There’s always a minimum guaranteed annual return, and universal life insurance is an easy road to premium financing. In fact, private banks often finance these policies because of the guaranteed payout at maturity.

For portfolios that need more liquidity but have enough assets, the universal life insurance policy gives an additional benefit as it is paid out in cash.

The risks here are those inherent to any high-value investments. Policies require stringent underwriting, and on the basis of various checks, the policy offered to you may not be as attractive as you initially thought.

Overall, universal life insurance policies are a great option to diversify your portfolio, structure your wealth and plan your estate – as long as you are cognisant of the changes it will bring, and whether it will get you closer to your goals.

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Finsbury Wealth (DIFC) Limited.

Finsbury Wealth (DIFC) Limited (the “Firm) Financial Advisors are not tax consultants. Their financial planning advice limited to the confines of the Firm’s authorised license functions, Advising on Financial Products and Arranging Deals in Investments. While Long-Term Insurance (LTI), such as Universal Life Insurance, may potentially offer certain tax benefits, these benefits can vary depending on your jurisdiction and therefore it is important to obtain advice from a tax specialist in relation to you personal tax affairs