It is a form of Permanent Life Insurance, that involves a self-directed long-term investment component with a tax-deferred investment account. In other words, it offers flexible protection that enables you to choose your investments and plan your payment schedule as per your requirement. This type of insurance also provides Lifetime insurance coverage & permanently protects your family and your legacy. Here you may stop paying premiumsâŊin theâŊevent of any financial problems and thatâs why there is no guarantee of cash value available in this type.âŊ MostâŊuniversal life insuranceâŊpolicies contain a flexible premium option. You can pay a single premium (single lump-sum premium) or fixed premiums for 10 years or 20 years, but if the fundâs performance is not good, there could be loss and one have to pay extra premiums for few more years. This is always good for people who have extra cash available to invest and gain profits. Some disadvantages of getting universal life insurance include higher premiums, surrender fees, lapse potential and uncertain returns.
Some universal life insurance policies are designed with the level cost of insurance, that divides the cost of the coverage evenly over the life of the policy. While other policies have a yearly renewable term (YRT) that initially involves a lower cost and increases overtime to equal your actual cost of insurance.
Benefits of Universal Life Insurance
- It includes lifelong insurance coverage.
- You have the power to choose your investment options and manage your risk profile.
- It is cost-effective and includes flexible premium payment options.
- It also provides your beneficiaries with a tax-free payout after your death.