An Introduction To Universal Life Insurance

June 9, 2008

When people start looking into buying a life insurance policy, they usually think to check out term life insurance and whole life insurance. Many of these people have not heard of another choice that they have, which is called Universal life insurance. Anyone who thinks that a whole life insurance policy would be ideal for their needs should look into Universal life insurance.

This type of insurance can be considered as a form of whole life insurance, but you will find that it is much more “user friendly” and adaptable to your needs. Not only are you able to choose how much coverage you want, but can also go back and change the amount if your circumstances demand it.

A Universal life insurance policy actually pays you for purchasing it. You earn interest whenever you make a monthly premium payment. The amount of your payment that is more than the actual cost of the policy is credited back to your insurance account every month. The amount of interest you earn depends on the interest rate that the insurance company decides upon.

You do not have to pay any taxes on this interest, because the money is considered to have already been taxed. The death benefits on a Universal policy are also tax-free. You can choose which way you want your beneficiary to receive their benefits when you pass away. They can get the basic amount of life insurance that you chose when you took out the policy, or the entire amount that is in your account.

You have quite a few options when you take out a Universal life insurance policy. You can choose when to make the payments on your policy, and also how much to pay, depending on the limitations set by your insurance company. You are able to buy coverage for your entire family by adding a rider for those members you want to include. Another option is that if you should become disabled, your monthly premiums can be set aside by the insurance company.

You can also take out a loan on your policy, or request and receive funds from the cash surrender value of your policy. However, any money you do not repay or redeposit will come out of the amount that your beneficiary will get when you pass away. Withdrawals will cost you – most insurance companies charge a fee for this service. You would also be charged a fee if you decided you wanted to cash in your policy.

Universal life insurance could be the option you are looking for to protect yourself and your family.

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