A Flexible and Permanent Form of Protection
Universal Life insurance is a flexible, permanent life insurance plan which is perfect for those seeking the low cost of a Term Life insurance plan combined with the cash value accumulation incentive of a Whole Life insurance plan. It offers long term coverage and, while payments are variable, the plan provides an opportunity to build a savings account throughout the life of the policy.
This plan grants the policyholder with the flexibility to transfer money between the insurance and savings component of their plan, which are separate. The interest accumulated in this tax-deferred savings account can be borrowed against to help cover future premiums, and like the premiums themselves, has potential to change over time. A Universal Life plan allows cash value to grow at a variable rate that is adjusted monthly. The overall freedom of flexibility that Universal Life provides allows the insured to make adjustments to their policy which help meet their financial needs at any given time. For instance, if the policyholder is not able to meet their premium at any given month, the cash value accumulated in the account can help supplement the premium owed (as long as funds are available). While the insured can borrow against their policy, it is important to know that this can decrease the cash value and death benefit of the policy if the money borrowed is not repaid.
When considering Universal Life insurance, it is important to consider factors such as:
- The risk of a lower cash payout if borrowing against the policy
- The need for permanent coverage with little to no need for cash surrender values
The concept of having control over monthly premiums (within contractual limits) while still maintaining permanent coverage is what makes this life insurance plan a great option for anyone seeking long-term security at an affordable cost.