Universal life insurance has many positive features over other insurance policies and plans, such as the freedom and flexibility to move your money around and use it as you wish while you are still alive. It is best to invest during your younger years; however, it can be beneficial at any time in your life.

Understanding Universal Life Insurance

Life is uncertain and universal life insurance (UL) can provide lifelong security and flexibility to policyholders. It is both a life insurance plan that incorporates some elements directly related to investment savings and other elements that more closely resemble that of a term life insurance policy. Under a UL policy, you have greater flexibility than other types, such as to select the ways you would like to use your premiums toward investments and savings and to use payouts toward future premium payments. The differences and advantages are unique. However, UL is most commonly compared to whole life insurance due to the many similarities.

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Universal Life Insurance FAQs

The primary differences between this insurance policy and others are the flexibility, the duration of the plans and the costs of premiums. Each policy has the ability to divide the premiums into a death benefit that will be awarded to your chosen beneficiary at the time of your passing and to invest the other portion as a way to increase your savings to be used during retirement or any other way you see fit. Many people enjoy this option so that the investment eventually pays for the premiums that will be distributed to the beneficiary in time. It is also different from term policies in that it does not have set parameters for the duration of the validity of the plan. With this plan, you are provided with lifetime coverage so that you never have to worry about it again.

Many people enjoy the benefits of a UL policy over other insurance plans. You can receive the benefits of these policies for life without having to pay the premiums until you pass. It is possible to change the amount you pay to your premium and your death benefits as frequently as you like. With the death benefit, you can select either a fixed payout or for the payout to be representative of the value of the policy. And you can take money out against your accumulated cash value fund for any number of reasons, particularly if you find yourself in financial difficulty.

Perhaps the best reason to choose a UL policy is that it can change with your life circumstances. You have the option to cash out some or all of your savings policy at various stages throughout your life when times become difficult financially or simply to use it for a down payment on a house and other living expenses. You can also move more money into the investment allocation of the policy to build your wealth more quickly. Your cash will grow based on the interest rate as established by the policy and the market.

Each policyholder has a number of opportunities in terms of the ways they can use a UL policy in life and in death. If you select to surrender the policy or rather end the policy, because you simply do not want it any longer or because you need the money for something else, you can receive a cash value payout. You can borrow money against the policy or take out policy loans and use the current cash value of the policy as collateral. And you can use the cash value of the policy to pay your monthly premium payments. Keep in mind that each UL plan has a maturity date which is typically between the ages of 85 and 121. At this point, you will receive a payout as a death benefit or cash value.

An Ideal Time to Invest

It is important to note that a UL plan is ideal to invest in during your 20s and 30s to ensure you have time to build your assets. You want to have the plan for up to 15 years prior to making any financial adjustments to the account. It is also more beneficial to start at a younger age when rates are lower. Another consideration is that a UL policy is most advantageous during a stable market and economy. An unstable market adds considerable risk to these policies.

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