Universal Life Insurance
A more complex, yet flexible Life insurance that may be incorporated in your wealth planning strategy
Universal Life Insurance
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Universal Life insurance is universal in the way that this policy is flexible. It is similar to a Whole Life policy in the way that it’s a permanent policy and may offer cash accumulating benefits; however, unlike Whole Life policy, Universal Life insurance offers flexible payments and may allow to increase or decrease the death benefits amounts.
Since Universal Life policy builds cash value, it may allow you to skip some of your payments as long as you have sufficient cash value built in the policy.
Two major components
Think of Universal Life insurance as a financial instrument built with two major components: 1. Life insurance part provides the coverage to insured for the benefit of dependent and 2. Tax free bank account, which accumulates cash value,- it is your money that grow in value similar to a long term retirement account. You can take out loans against of your own money if needed, and you may not be required to pay back, if you don’t want to refill your cash value back to what it was. Many people often leave the cash account along and continue contributing with their regular payment allowing their money to grow, treating this account as a retirement account.
Death benefits
As far as adjusting your death benefits, you may be able to adjust your limit of insurance whereas with Whole Life you’d need to apply for an additional policy, if you decide that you want to increase your limits of coverage. With Universal Life insurance you may request for insurance company to increase your limits. Insurance underwriter often will request for another medical test and, if it will come back acceptable, insurance company may approve the increase in coverage without the need of applying for another insurance policy.