Universal Life

What is Universal Life Insurance?

Universal life insurance is a permanent life insurance that includes a savings plan and is based on a cash value. When you have universal life insurance, your premium payments that are above the cost of the insurance are invested allowing a savings build up of cash to accumulate. You can often use the interest from your accumulated savings to pay your premiums, helping the policy to practically pay for itself.

Universal life insurance is very flexible. You can shift money between the insurance or savings aspect of your policy as needed. Universal life insurance premiums are variable and the cash value of your investments is allowed to grow at a monthly adjusted variable rate.

What is the Difference between Universal and Term Life Insurance?

Universal life insurance, like whole life insurance, is intended to provide for your entire lifetime of insurance needs. It is considered a permanent insurance. Because a universal life insurance policy will last for your entire life, you know that your beneficiaries will receive money upon your death. Term life insurance, doesn’t make that guarantee, because it only pays if you die during the term in which you have paid for coverage.

If you only require insurance for a short period of time, term life insurance is the better option. If you want life insurance that will last throughout your lifetime, buy universal insurance and lock in lower rates while you are young. Term life insurance rates get higher as you age, making term more expensive to buy later in life.

What is the Difference between Universal and Whole Life Insurance?

Universal and whole life insurance are the two types of permanent insurance that are available to policy holders. Even though they are both intended to last for the duration of your life, there are a few basic differences between the two types of insurance. Universal life insurance was actually developed from whole life insurance, but it is much more flexible. Universal life insurance has a greater potential for its cash value to increase.

Universal life insurance is also more flexible than whole life insurance when it comes to the death benefit and premium payments. When you have universal life insurance it is possible to increase or decrease your death benefit without having to surrender your policy. When you try to do this with whole life insurance, you must get a new policy, which might increase your premium payment.

Universal life insurance also has many more flexible exit options than whole life insurance. One of these options is a zero interest loan that will allow you to access the monetary growth of your policy while avoiding tax penalties.