So, what is universal life insurance? Universal life insurance is a type of insurance, popular for its flexibility and investment options. Under this type of policy, payout is made only after the holder’s death. In addition to the set death benefits, policy holders are able to earn profits from money invested in their universal life policy. In addition, one can change their coverage level all through the existence of the policy to match their needs at specific periods of time. However, each universal life policy comes with certain terms and conditions that must be observed at all times if one is to enjoy all the benefits the policy has to offer. For example, in most policies, you shouldn’t decrease the policy limit beyond a pre-set amount.
A universal life policy gives you control over your premiums. You determine the amount you want to pay and the frequency in which you pay them. It is good to understand how the payment option you choose affects your benefits.
- You can choose to pay your premiums in a lump sum. This will increase your death benefits and grow the cash value. Interest earned on the cash value is tax-deferred so the higher you pay, the more the returns.
- Should you be unable to pay the full amount of your premiums for whatever reason, you can pay a lower premium. However, this will affect the face value of the policy. Usually, insurers will deduct the difference between the minimum monthly premium and the lowest amount of premium you pay from your cash value account. Some companies have a charge for every premium payment made. This is something you want to confirm before buying a policy.
- You can withdraw from your cash value account if you so wish. Insurance companies have varying limits on the number of withdrawals one can make in a year as well as an upper limit on how much one can withdraw at any given time. Most companies charge a withdrawal fee.
- The interest rates vary from company to company. In some companies, the cash value earns interest at the current interest rate of the company. In others, a certain percentage of interest is guaranteed, regardless of what the company’s interest rate is.
A bit of research will help in choosing a good universal life insurance policy. Compare policies and offers from different companies, making sure to read the fine print. Because of its flexible payment system, universal life insurance guarantees coverage in both financial highs and lows. http://www.quotes-center.com/car-insurance-quotes-nc/