Hybrid life is a product category that provides the Guaranteed Cash Surrender Values (GCSV) of whole life, with the accountability of traditional universal life, as well as enhanced flexibility. Some newer products offer some of the benefits of both whole life and traditional universal life, but when selecting a hybrid product, make sure you also look for a GCSV, a flexible premium schedule, an accumulation fund, and a selection of investment options.
Policies stay in force for life provided the monthly charges are covered.
Premiums are flexible. Typically, only the Cost of Insurance needs to be covered, but you can also pay more to invest in the tax deferred fund of the policy, or to purchase additional paid up coverage with cash values.
Provided you pay more than the minimum premiums, cash value begins to build in the tax deferred fund of the policy, allowing for premium holidays, because the company deducts monthly insurance charges from the fund. With EquiBuild hybrid life, even when the fund value is zero, the insurer will make automatic loan advances against the guaranteed cash values in the policy to cover the monthly charges.
EquiBuild hybrid life provides a wide selection of investment options including a smoothed return account. Some products offer a few hybrid features, but you and your advisor should look for a product with a selection of investment options, and ideally a smoothed account, which offers important cash flow flexibility for your future.
Hybrid life products, such as EquiBuild, include a built in guaranteed cash surrender value (GCSV). In addition, the policy owner may purchase additional coverage on policy anniversaries that also has GCSVs. With EquiBuild, the pricing and cash surrender values for each $1 of additional coverage that will be purchased are guaranteed when the policy is issued.
EquiBuild hybrid life offers an option to underwrite a second life when the single life policy is being issued to guarantee that a switch can be made in the future, from Single to Joint Last to Die coverage, regardless of the health of the added insured at the time of the switch. EquiBuild also includes a contractual right to switch from Single to Joint Last to Die under which, rates and availability are based on the health and lifestyle of the insured at the time of the switch.
In the case of a major disability, EquiBuild allows you to access the balance of the tax deferred fund, as well as the guaranteed cash values (provided you surrender the associated insurance coverage) without any tax implications.
After the 10th policy year, you may invest policy funds in EquiBuild's Life Investment Option which offers a guaranteed fixed monthly return for the rest of your life.
EquiBuild hybrid life can cost a bit more than traditional Universal Life. For a few dollars more this hybrid policy builds considerable early guaranteed cash values, while at the same time offering numerous additional benefits and added flexibility.