Universal Life Insurance

A fairly new form of life insurance, universal life is a kind of permanent policy that features flexible premiums. The big selling point behind universal life is your ability to raise or lower the value of the policy, depending on the amount of the premium you want to pay.

Get the Flexibility You Need

A universal life policy lets you decide how much of your premiums will be used for your insurance benefits and how much for your plan’s investments. Just like whole life policies, your plan will accumulate cash value over time. In some cases, the accumulated cash value will pay for the premiums itself.

Most importantly, universal life can offer you substantially higher cash-value yields than those on basic whole life policies.

A universal life policy will have a guaranteed rate of return investment. This will be disclosed in advance. You’ll receive annual reports laying out your entire universal life portfolio — including the current amount of insurance protection you’re carrying, the cash value of your policy, the costs of your insurance, carrier fees, amounts credited to your cash savings from premiums, and the rates of cash value return.

Advantages of Universal Life Insurance:

• Your universal life plan will let you adjust your benefits if your needs change.
• The value of a universal life policy can be used as collateral for a non-taxable loan.
• Universal life offers you the flexibility to pay either a smaller or larger premium — depending on your circumstances. This can be an important feature if your household income fluctuates.

The Downside of Universal Life:

• If your premiums stay too small for too long, your policy could lapse and leave you without life insurance protection.
• If your insurance carrier doesn’t manage its investments well, the return on the cash value portion of your policy will suffer — though it will never dip below a minimum interest rate guaranteed by your contract.
• If the amount being made on the invested value goes down, you’ll have to pay a higher premium as your plan ages.

Evaluating A Universal Life Plan

Two key things to consider before buying a universal life policy:

• Find out how your rate of return will be calculated and how long your initial rate will be guaranteed.
• Check into the plan’s projected cash value after one year and compare it to that year’s premium.

To learn if taking out a universal life policy is a good idea for you, talk with an insurance agent. You can fill out this simple form to get matched with agents in your area. They’ll answer your questions, and help you choose the right life insurance policy for your situation.