Universal Life Insurance
Universal Life Insurance is a relatively new category within permanent plans. Universal Life Insurance is composed of two components; a savings portion, and a death benefit portion; similar to Whole Life Insurance. The death benefit portion is usually considered flexible because you have the ability to choose whether you would like a flat benefit, which means even if the investments in your savings do well your death benefit payout will stay the same. The other option is to make it flexible which allows your investment’s success to determine the increase or decrease in the amount paid to the beneficiary.
Additional flexibility is added under a Universal plan by making it possible to transfer wealth between the accrued cash value and the death benefit component. Another difference is that Universal Life Insurance usually provides details about its financial standings whereas Whole Life Insurance plans usually make it difficult to access that information. Finally, probably the most differentiating feature of Universal Life Insurance is that the policy holder has the ability to use accrued earnings from their savings portion to pay for premium fees.
Universal Life Insurance incorporates a flexibility that allows the policy holder to tailor the policy’s performance to meet his or her needs. For example, if the savings portion is producing poor returns then you may decide to use that money to pay your monthly premiums and make use of a savings program elsewhere.
To conclude, Universal Life Insurance is a new tool that has all of the benefits of Whole Life Insurance but with more flexibility. When choosing a Universal plan to suite your needs it is important to check insurer rankings on sites like A.M. Best, Standard & Poor’s, Moody’s, and Fitch. These sites along with knowledge on the different types of plans offered will give you the confidence you need to financially provide for your beneficiaries’.