Universal Life Insurance
Universal life is like
term life insurance with an investment attached. It is a kind
of flexible policy that lets you vary your premium payments and/or
adjust the face amount of your coverage. The premiums you pay
(less expense charges) go into a policy with an attached investment
generally consisting of a short-term money instrument yielding
a modest return.
If your yearly premium payment plus
the earnings on your account is less than the total charges,
your account value will become lower. If it keeps dropping, eventually
your coverage will end. You may need to increase your premium
payments or lower your death benefits to keep the policy in force.
Even if there is enough in your account to pay the premiums,
continuing to pay premiums yourself means that you build up more
cash value.
Generally, you'll have lower premiums
than with whole insurance but still keep most of the same benefits.
However, the cash value build-up is not guaranteed and depends
heavily on the your invested premiums' performance. Basically,
cheaper rates but less certainty about a cash value.
Universal life can be a very solid
base for an overall protection strategy and can easily and economically
be supplemented by other policies to ensure total protection.
An experienced professional can assist you in constructing a
strategy to bring you the security only well planned protection
can bring.
Pros:
Similar to whole life insurance. More flexible premiums. Fund for younger buyers
who may have fluctuations in their ability to pay.
Cons:
If the insurance company does poorly with its 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.
Rates and coverage vary form state to state. Shop around on your own and talk
to an independent insurance agent to make sure you get a plan that's right
for you. It's amazing how much rates may vary from company to company for the
same coverage.
For more information
or a quote on universal life insurance our
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