3 Steps To Lowering Universal Life Insurance Cost

It is important to understand the cost of universal life insurance so that you can do what you can to reduce it.

Understanding Universal Life

One of the most attractive features of universal life insurance is the flexibility of the premium and payment terms. You can build cash value by paying into the account more than is owed each month. The cash value that you build in the account earns interest, and subsequent months of premium can be deducted against the cash value. Universal life costs less than variable life insurance but more than term life. The cash value you build in your universal policy is tax deferred and will remain untaxed if paid out as a death benefit. Money can be borrowed from the cash value tax free as long as the policy does not lapse.

You can lower your cost in three ways:

1. Buy Young.

The younger you are when you begin your universal life insurance policy, the quicker you will be able to build cash value to continue covering the cost of the insurance. While life insurance is often the last thing you think about when you are graduating from high school or college, it is often the best time to start your policy.

2. Adjust Your Coverage Expectations

Life insurance is supposed to protect your assets and your family in the case of your death. It should be enough coverage to pay off your home and property loans, pay for your funeral, and cover any unexpected costs. If you don't need a million dollars in coverage, why pay for a million dollars in coverage? You would be surprised at how much lower your costs would be if you reduced the death benefit on your policy.

3. Get healthy.

If you smoke or have chronic health conditions, they will be considered in the cost of your premium because you are considered a higher risk. If you want a lower premium, stop smoking and be a non-smoker for at least two years before applying for your policy. If you have chronic health conditions that can be controlled, like obesity or adult diabetes, do what you can to improve your health and your life expectancy.

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