Universal Life Insurance Key Points
Universal Life insurance is a type of Permanent Life insurance. Much like a Whole Life insurance policy, Universal Life insurance has cash value that accrues in tax-deferred savings over time. In many respects Universal Life has many of the features of both Whole Life and Term Life insurance, since as with Term Life, you can also vary the premium payments and death benefit amount from year to year.
Key Points of Universal Life Insurance
- Universal Life has cash value.
- You can adjust premiums and coverage over the life of policy.
- Universal Life insurance policies have a greater degree of flexibility than traditional Whole Life policies.
- The investment portion of your premium is placed in a variety of bonds, mortgages and money market funds.
- Interest rates will vary, but will not drop below a minimum, usually 4 percent.
- Interest is adjusted monthly, not annually as in Whole Life insurance.
With a Universal Life insurance policy, you can decide on your premium amount to fit your financial circumstances – but if you pay too low of an amount for too long, the policy could lapse, leaving your family unprotected. Always check with your insurance agent before lowering your premium.