Universal Life Insurance

When you think ahead to the end of your life, you understandably will consider how the lives of your loved one’s will be affected by your loss. In addition to the emotional grief that they may experience after you pass away, there may also be financial concerns. After all, you may have one or several dependents who rely on your financial support for their lifestyle and general well-being. Universal life insurance is one type of coverage that can be purchased to provide your loved ones with financial death benefits after you pass away. This is a unique type of coverage, so it is important to understand how it works.

With a universal life insurance policy, you choose the amount of death benefits that you wish for your loved ones to receive. You also name your beneficiary. This coverage has permanent benefits. This means that the term never expires, and the coverage will remain in place until you pass away as long as the premium continues to be paid. Uniquely, universal life coverage also has a cash accrual component. A portion of each monthly payment is allocated to your cash balance. This balance will grow through interest and continued contributions from monthly premium payments. It can be withdrawn or applied to future payments.

Another unique feature is the ability to adjust your death benefits in comparison to the cash accrual portion of each payment. This flexibility gives you the ability to adjust your coverage later as your needs for death benefits change over time. The cash value portion of this coverage could be used to put the kids through college, to make investments, to pay off debts and more. Some people also keep the cash value in the policy as a financial asset that continues to accrue interest over the years.

As you can see, there are many benefits associated with purchasing a universal life policy. Because you can set the death benefits at your discretion within reason, it is wise to carefully assess your loved one’s financial needs after your passing as a first step toward setting up coverage.