What is Universal Life Insurance?

Never heard of Universal Life Insurance? Not sure how it differs from other types of life insurance policies? You’re not alone. Many people have heard of term life insurance and whole life insurance, but not a lot of people know about Universal Life. At Insurance Best Prices, we can help you understand life insurance policies, your options, and the best type for you. We can also help you get free quotes, so you can find the right coverage for the right price.

With Universal Life Insurance you get a combination of a permanent life policy that lasts the duration of your life and a savings that has cash value. When you pass, the policy death benefit is paid out to your beneficiaries. You can use the cash value your policy has accrued to cover a wide range of costs including major purchases, emergency expenses, and more.

Benefits of Universal Life Insurance Policies

There are many benefits to Universal Life Insurance policies including the fact that they allow you to withdraw money, earn interest on your policy’s cash value, have flexibility with premiums, and adjust the policy death benefit. Here’s more information on the key benefits of Universal Life Insurance.

Cash Value

When you make a premium payment on your Universal Life Insurance policy part of it goes toward paying the death benefit. Another portion goes towards the cash value. Once a certain balance is achieved, you can begin to withdraw or borrow against the cash value of your policy. It’s important to review your policy before you borrow. Doing so could reduce your death benefit, cause your policy to lapse, or create tax implications.

Earn Interest

You can earn interest on your universal life insurance policy that is similar to current money market rates. Interest rates fluctuate with the market, so the interest you earn could go up or down depending on the market. Some policies come with a minimum performance guarantee, so keep that in mind when shopping for your policy.

Flexible Premiums

You could lower or stop paying premiums all together for a certain period of time if the cash value of your account can cover the costs associated with your universal life insurance policy. This can come in handy if you have debt you want to focus on paying off, are experiencing short-term financial hardship, want to reduce expenses for a few months, etc. However, watch your spending, because your coverage could end if your cash value runs out.

Adjust Policy’s Death Benefit

As time goes on, you may want to increase your death benefit. Only some insurance companies allow this, and it is contingent on a medical exam. Increasing the death benefit can also increase your premiums. You can also decide to reduce the death benefit. You might want to do this if your dependents become more financially independent for example.

Ready to consider universal life insurance? Request a free quote today.