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 key features 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 is invested, allowing the policy to accumulate a cash value over time.
Universal life insurance provides a death benefit to beneficiaries upon the policyholder’s death, while also allowing the policyholder to borrow against the cash value or use it to pay premiums.
When considering universal life insurance, it’s essential to understand its complexities and potential risks. The cash value growth is often tied to interest rates or investment performance, which can be unpredictable. Therefore, it’s crucial to carefully review the policy terms and conditions before making a decision.
