Once you decide to buy universal life insurance, you offer yourself the opportunity to enjoy versatile benefits and lifelong coverage. Interestingly, this coverage’s features can help you put some money aside.
Unlike the other types of permanent life insurance policies, this particular life insurance operates more flexibly without putting pressure on your pocket when paying premiums.
As long as your premium comes at the appropriate time, your coverage and benefits will serve you and your loved ones without regret.
So if you are at a crossroads and wondering which life insurance coverage is better for you. While whole life insurance is great, this article will explain what you need to know about universal life insurance.
What is universal life insurance?
Universal life insurance is a type of permanent life insurance that covers you for a lifetime and has a savings feature called Cash value. It has a flexible premium plan and a beneficiary’s benefit payout for your loved ones.
For example, whole life insurance has a fixed premium amount each policyholder pays for their coverage. That is not the case with the universal kind.
Policyholders who experience financial problems can negotiate with their insurance provider to reduce their premium amount. This feature makes universal life insurance a great option among other types of permanent life insurance.
Is universal life (UL) insurance permanent or term?
So long as your premiums come in when it is time, your universal life insurance will continue to be in force until you pass away. For clarity, term life insurance lasts for just a couple of years before it expires.
More so, it does not expire. If you do not want to maintain it again, then you can put an end to it.
Ending any type of permanent life insurance is called surrender. It attracts a charge you must pay, or it will be deducted from your cash value before your payout.
How to use universal life (UL) insurance as an investment?
Cash value is a feature you find in UL insurance. Your cash value holds the savings in your policy, which you can also call an investment.
The money that goes into your cash value comes from part of your premium payment. You and your insurance provider can decide how much will be deducted from your premiums to go into your cash value.
As a rule, you can not begin to withdraw from your cash value for some years until it matures. When it is due for withdrawal, you can take out a reasonable amount from it, which will not harm your beneficiary benefits.
This way, you have an investment by the side while your coverage is protecting your life.
Can universal life (UL) insurance be converted to whole life insurance?
Yes, changing your UL insurance to whole life insurance is possible. First, ask the insurance company if they offer this service.
They will guide the transition and transfer your cash value to the new policy if they do. Changing to whole life insurance cash value does not incur a tax charge.
What are the benefits of (UL) insurance
UL, as universal life insurance is called for short, has many benefits.
- It has a flexible premium payment
- The beneficiary’s benefits can be adjustable
- It is cheaper than whole life insurance
- Lasts for a lifetime
- It helps you to build money.
Conclusion
Indeed, UL may not be the right choice for everyone. However, if your need for coverage comes with a desire to save, UL can be your best bet.
