Universal Life Insurance Policies Explored

Universal life insurance policies are designed to be used by people who need greater insurance flexibility. This type of policy typically has a cash value that can be increased by paying premiums and decreased by fees that are charged by the insuring company. You can also add interest to the policy, depending upon the agreement signed by the person who takes out the policy. Universal life insurance policies are similar to whole life insurance policies, with only slight differences. If you are considering taking out one of these long-term insurance policies, then you should consider the universal before you take out any other insurance.

Benefits of the Universal Life Insurance Policy

If you are taking out a universal life insurance policy, then you will notice that the policy is much more flexible than those offered through the whole life system. With a universal policy, the premiums are much more flexible. You will have a decreased chance of losing all your money if you fail to pay one premium. The death benefit is also more flexible. In fact, the lack of this option in whole life insurance is one of the biggest complaints against it.

There is also a guaranteed death pay-out. This is more flexible and allows you to choose a smaller benefit. This flexibility can mean you have less premiums and fewer changes. You could also increase the policy later, however, you will usually be required to complete a new application form. You can also choose two options for the payment of the benefit. You can choose to have the benefit remain level throughout the policy, and the premiums smaller. Or, you can choose to have your beneficiaries receive a face payment plus additional cash values. Keep in mind that the amounts can also rise and fall, depending upon market fluctuations.

Disadvantages of the Universal Life Insurance Policy

Although the universal policy is generally considered to be much better than the whole life, it can also have some disadvantages. One disadvantage is that the balance of the death benefit can increase or decrease. Also, there are fewer guarantees with the universal life insurance policy so you might find that the rate of return for your payments is lower than with the secured whole life insurance policy.

Additionally, the interest rates on the premiums that are paid are not the best rates. You get a smaller percentage of the return than you would with a whole life policy. As an alternative to this policy, many people are choosing the variable universal life insurance, where the money they give as premiums is then invested into financial portfolios, such as mutual funds. This is a way of securing the money, while still receiving a good cash benefit at the end.

Before you decide on your insurance needs, consult with your financial and insurance agents to see if universal life insurance is best for you and your family.

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