Universal Life Insurance

Why You Need Universal Life Insurance

There are three main types of permanent life coverage, and Universal life insurance is just one of them. Just like the other life plans it also comes with a savings benefit provided an individual pays the required premium for life. In other words, even if you live up to a hundred years and pay your premiums you will get your lifelong death benefits.

Key Features of the Life Insurance policy

Besides the lifelong benefits here are some of its key features:

Withdrawing and borrowing money against it:
The universal life policy allows you to borrow some amount of money from the cash value for emergencies. Remember, part of your premiums build up the cash value while the rest are dedicated towards the death benefit. The value of money you can withdraw and borrow from your accumulated plan’s cash value varies from one company to the other. However, it’s vital to note that withdrawing or borrowing can bear a tax implication or even reduce the death benefit.

The plan’s cash value earns interest:
If you get a fixed policy, then your cash value will be earning you some interest that is equivalent to the current money market rates. Depending on your company, you may get protection against the fluctuation of the interest rates. Otherwise, they are bound to change with the current trends in the money market.

Premium flexibility:
If you have enough money in your cash value that can pay for your premiums, universal life allows you to stop or lower the amount of money you pay as premiums. This is a very helpful feature for people who lose jobs or retire from active duty. However, the red flag comes if you happen to use up the money in the cash value and the universal life cover ends.

The death benefit can be adjusted:
If you decide to change the amount of money that is paid out upon your demise, you can undergo some medical exam, and if you pass, you can adjust the death benefits upwards. Also, to reduce the cost of premiums, insurance companies allow clients to reduce the death benefits.