Universal Life Insurance

What is universal life insurance? It is a policy which can be designed to provide insurance protection over your lifetime. Let’s review more about this type of insurance.

Considered to be a permanent policy, universal life insurance lasts as long as you pay the premiums. While, whole life insurance guarantees this lifetime protection, a universal life insurance policy does not have these guarantees but there are now universal life policies where you can add a feature that guarantees that the insurance will last the rest of your life. Permanent insurance policies are an excellent way for you to keep coverage over a long period of time. The two main types of permanent life insurance policies are: whole life and universal life. Universal life covers an event such as one’s death, while term covers you for the possibility of you dying during the term period.

While whole life insurance guarantees the death benefit for life, as well as the cash value and the premium, universal life insurance assumes an interest rate; the cost of insurance; and comes up with a projected premium. If the insurance projections on the universal life policy do not come through, then you may have to pay higher premiums later; have lower cash value; or lose the policy. However, you can now get universal life insurance and guarantee that the policy will last for a lifetime. It may lose its cash value but the insurance amount can be guaranteed for life.

Keep in mind you will have lower premiums than with a whole insurance policy, but still keep most of the same benefits. However, the cash value is not guaranteed. Universal life insurance can act as overall protection and can be supplemented by other policies to ensure total protection. Keep in mind, however, that if the life insurance companies do poorly with their investments, the interest return on the cash portion of the policy will decrease. In this case, less money would be available to pay the cost of the death benefit portion of the policy.

There are two types of universal insurance policies you can opt for: one provides a level death benefit equal to the basic amount of life insurance you choose; and the other provides a death benefit that varies with your policy account value. Your death benefit is the amount of life insurance plus the policy account value.

Because rates and coverage vary form state to state, it would be incumbent upon you to shop around, conduct research into universal life insurance and other policies, as well as speak to your insurance professional to ascertain which policy is right for you. So too, you may need to supplement your existing insurance policy to ensure you are covered for any unexpected event.