Is Universal Life Insurance for You?

Universal life insurance is a type of permanent coverage that offers more flexibility when it comes to cost and coverage. It's perfect for the policyholder who wants to take advantage of the market without loosing the security of the life policy.


This page:

  • Explains how universal life insurance works

  • Outlines the pros and cons of universal coverage

  • Makes clear who should buy this type of policy

Save up to 75% on life insurance. The key to saving on life insurance lies in comparing quotes and policies from as many carriers as possible. Use our fast and free comparison service to get quotes from all the major carriers in your state, and see how much you can save! Start here.

How universal life insurance works

Universal life insurance is a less rigid version of whole life insurance. A universal policy allows the holder to adjust his or her premium payments and death benefit over the life of the policy. The cash value portion of a universal life insurance policy will also reflect any increase or decrease in premiums payments.

Of course, the insurance company will set some boundaries on these adjustments. Monthly premiums must sustain a basic benefit amount and cover the cost of the policy's monthly maintenance by the insurer.

Universal life insurance policies are also tied to shorter-term interest rates than are whole policies. This means that their rate of return is often significantly higher, but it can also mean greater risk when interest rates are falling.

Universal life insurance policies are best for policyholders whose financial needs or status varies over time. The policy can be adjusted to fit your present circumstances without risking the coverage itself. Some adjustments may require an additional medical examination.

The pros and cons of universal coverage

The wisdom of choosing a universal life insurance policy has everything to do with timing. Universal life insurance earns interest at the current money market rate. Insurers make no minimum guarantees concerning your "cash value" savings on such a policy.

Therefore, your cash value yields and your premiums will fluctuate with the changing economy and interest rates. If the interest rates drop, it is likely you will have to pay more in premiums to maintain the policy.

However, on average, the cash value of a universal life insurance policy grows faster and larger than the cash value savings of a whole life insurance policy. The bottom line is that you need to weigh the risks you are taking against the rewards you will reap from smart investing.

Sidebar
An insurance professional can help you decide whether a universal policy, another type of whole life insurance, or perhaps a term life policy is right for you. Get a quick quote and get in touch with a licensed agent in your area.

Who should buy a universal life policy

Since universal life insurance allows flexibility, this is a perfect policy for a someone who anticipates varying degrees of coverage, but does not want to keep switching policies.

If you have not taken on too many new financial obligations, such as a mortgage, or had too many expenses, such as college or a newborn, but know that such commitments are in your future - consider this option.

Keep in mind that this type of policy requires organization to keep track of the varying prices and coverage. If you prefer to pay your premiums and leave the rest to the experts, you might be better off with standard whole life insurance. If you want even more control over policy details, consider variable life insurance.

Finding the best universal life insurance

Universal life insurance isn't a simple subject, and we recommend that you speak with a professional before making any type of commitment.

To talk to health insurance agents who offer universal policies in your area, try InsureME. One easy online application can get you multiple quotes from local and national providers. It's the simplest means to comparison shopping with the aid of professional advice.

Get a quick quote from InsureME now.

Learn even more:

Getting the lowest possible premium on your life insurance is almost like an art form. There are many variables to consider, and to get the right balance of term length, benefit amounts, and policy riders and illustrations, you need to take a careful step-by-step approach to the buying process.

Our free life insurance course is designed to help you do just that.

Subscribe here: