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Universal life insurance

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This has been designed from whole life insurance, adding more flexibility to it and allowing the individual to vary certain parameters associated with the policy like the death benefit and savings accumulated.

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What is universal life insurance?

Universal life insurance is similar to whole life insurance in the sense that it offers lifelong insurance protection for the individual, whose beneficiaries are eligible for a substantial death benefit. However, it is different from whole life insurance because it includes a savings element along with the insurance. But, universal life insurance policy is also permanent in nature with a cash value that accumulates over a period of time. You can request for universal life insurance quotes, to find out if it can offer a good option as a life insurance policy that offers savings benefits too.

Features of universal life insurance policy

Universal life insurance policy has several features, but the most noticeable one is that of flexible premium. In other words, the premium can be paid off from the savings element, so that you donít have the burden of an added cost. There is a minimum monthly payment required initially to sustain the benefits. However, as the cash value grows the interest could accumulate and turn the cash value into an investment. Universal life insurance policy needs to be in effect for a longer period of time, preferably more than 20 years. This policy is ideal for those who wish to have a single life insurance policy with a guaranteed death benefit, but with flexibility to change the cover and premium.

Universal life insurance pros and cons

One of the important aspects is their short term interest rate, which could fluctuate with the market conditions. While it could be higher sometimes, it could also go down at other times. So, if the returns are good, your cash value increases very quickly allowing you to free yourself of the premium payments sooner. Individuals have a lot of flexibility to weigh their options and change the savings accumulated based on personal needs and budget. In other words you can vary premium as well as death benefits. The adjustments can therefore be made by the individual. Hence universal life insurance is ideal for those whose financial condition could vary.

One of the disadvantages of this policy as opposed to whole life insurance is that you cannot leave the policy to take its normal course. You have to be aware of the market fluctuations and interest rates and accordingly vary your premiums and savings. The premium could be comparatively lower for this policy as opposed to whole life insurance, and is ideal for those who are not looking for substantial death benefits. The policy also offers a good option for those planning to take retirement and want to have an investment ready by that time. One has to note that the policy could also expire if the cash value cannot support the charges of the insurance unlike in case of whole life insurance where maturity value is guaranteed as long as all the premiums have been paid on time.

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