When buying life insurance, it is important to understand the benefits of the different policy options. One of the primary types of coverage available is universal life insurance. With universal life, you will have all of the death benefits of life insurance coupled with the benefit of cash value accumulating in your policy. This makes universal life coverage a true asset.
There are a few points to consider when buying this type of coverage. First, you should select the amount of death benefits that is most well-suited for your needs. These are funds that could be used to supplement lost wages, pay off debts, pay for the kids’ college education and more after your passing. Because universal life is a type of coverage that will not expire, there is no term length to select. The coverage will remain in effect until you pass away as long as the premium continues to be paid. The other factor to consider is the accumulation of cash value. Most of these policies will have a cash value account that will accumulate with interest as well as with new deposits made from your premium payments. The interest rate can vary from policy to policy, and this can impact how quickly your funds will grow.
The cash value in the policy generally can be borrowed or withdrawn completely. There are different ways to use these funds. For example, some will use the money for retirement income, to travel, to improve the house or for various other purposes. There typically are not limitations regarding the use of funds. Furthermore, there is not a loan application or underwriting process that you need to go through to access the funds.
A universal life policy offers true benefits to the insured as well as to the beneficiaries. However, the cash value component to these policies can make them more expensive than other coverage options. Adjusting death benefits and the amount of cash that is applied to the account value regularly can help you to better manage the premium amount so that you can take full advantage of all of the benefits of a universal life insurance policy.