What Is Universal Life Insurance?
Universal life insurance is a type of permanent life insurance that combines a death benefit with a savings component. It offers flexibility in premium payments and adjustable death benefits, making it a popular choice for those seeking customizable coverage.
The primary characteristics of universal life insurance include:
- Flexible premiums: Policyholders can adjust their premium payments within certain limits.
- Adjustable death benefit: The death benefit can be increased or decreased based on the policyholder’s needs.
- Cash value component: A portion of the premium payments accumulates as a cash value, which can be borrowed against or used to pay premiums.
Universal life insurance policies typically offer various investment options for the cash value component, allowing policyholders to potentially grow their cash value over time. However, the performance of these investments can affect the policy’s overall performance and may require additional premium payments to maintain the desired death benefit.
It’s essential to carefully review the terms and conditions of a universal life insurance policy before purchasing, as fees and charges can be complex. Consulting with a financial advisor can help determine if universal life insurance aligns with your financial goals and needs.
