Universal life insurance offers both a death benefit component and a cash value component. Your policy will still be valid if you continue to live or pay your premiums. There are three types coverage available: Guaranteed universal life, guaranteed universal life and variable universal life.
Universal life can be used to obtain a permanent, life insurance policy or build cash value. Premiums can be adjusted to suit your needs. You can increase or decrease the amount of your premiums within the company's limits. The cash value can also be used to make policy loans and withdrawals.
Your policy will still be in effect if you die. However, your beneficiaries will receive only the death benefit. Any funds beyond this amount will remain with the insurance company. A single tax-free payment, as well as monthly or annual installments, is what beneficiaries typically receive. Annuities are an option offered by some insurance companies. This is a contract where the insurer agrees that the beneficiary will receive a one time fee or periodic payments for an agreed period of time.
You should remember that this will increase your cash value. If you don't have enough cash, you will need more or your policy may be cancelled.
UL allows for you to increase or decrease your payments as your circumstances change. Even though you may eventually have higher premiums to keep coverage, it can be easier to keep your insurance policy current if your earnings are different.
A UL policy provides insureds with many of their same permanent protection and benefits as wholelife coverage. However, UL policies also offer flexible premiums to allow for variable earnings. The policy may allow you to invest cash value in market-based options. This gives you the possibility of more growth. Universal life has lower guarantees for cash value, but it offers more.
From the first day, the policy is in effect. UL can provide an income tax-free death benefit to help protect your family's financial well-being. And as long as you keep a positive cash value amount, your coverage can't be canceled.