Learn about Universal Life Insurance Policies

The primary purpose of life insurance has traditionally been to provide a death benefit to your beneficiaries. However, universal life insurance, along with providing a death benefit, incorporates an ability to use the policy as a savings vehicle. Universal Life provides a term insurance type benefit wrapped up in a tax-deferred interest accumulating savings account.

Universal life insurance has cash value as well

An additional benefit of universal life insurance policy is that besides the tax-deferred savings, you can structure the plan so that you don’t have to pay premiums during the entire policy. If you either pay enough money over a stated period, or if the money in the tax-deferred savings portion of the policy have enough value to pay the death benefit, then you may not have to pay additional premiums to keep the policy in force.

What type of consumer would benefit from a universal life insurance policy? Since a universal life plan is a hybrid investment vehicle combined with a life insurance policy, many people who feel they need life insurance coverage later in life would benefit from a universal life policy. This would give the insured both a death benefit for life, along with a savings bucket that could possibly accumulate value that could serve as a supplement to your retirement.

On the other hand, many people will not need universal life insurance after certain life events such as the kids leaving the house, whereby it may be more beneficial to buy term life insurance policy and contribute to a proper retirement savings account such as a 401K plan or annuity.

If you think that a universal policy may look that it would be a good fit for your financial plan, there are a few important points to keep in mind.

Things to keep in mind when you buy a universal life insurance policy

First and foremost, be sure that you plan to have the policy long term since you will be paying premiums that are more expensive that an ordinary term policy. Usually, it takes a number of years to build significant cash value, so if you decided that you wouldn’t want the plan after a few years, you would be out of some cash.

Secondly, you need to make sure that you have a good knowledge of how to structure the plan. You can take advantage of the eTerm Insurance education center, or you can call us and take advantage of the expertise of our affiliated insurance agents.

As you can see, a universal life policy can serve a number of purposes above and beyond what an ordinary term plan could do. If you set up your universal life insurance plan  correctly, you can have a lifetime death benefit, and a supplement for your retirement to boot.