Universal Life Insurance: A Definition In Layman's Terms

It is easy to get overwhelmed when shopping for life insurance, so having a universal life insurance definition that helps you make an informed decision about your coverage is an important place to start.

What Is Universal Life?

Universal life insurance is insurance that offers more flexibility than many other forms of insurance, because you have more control over the cost of your premiums as well as the ability to invest and earn interest on the cash value that the policy builds. The advantages of universal life include:

  • Flexibility - You can choose your coverage amount and change the amount of coverage throughout the life of the policy without having to develop a new policy.
  • Cash building - You can pay extra into the policy on top of your regular premium or invest lump sums to increase the cash value of the policy.  When you have a tight month, that extra cash value can be used to cover the cost of your regular premium so you don't lose the policy.
  • Customizable -You can customize the coverage to accomodate your needs, protect your business and family, and anticipate your future goals.
The biggest advantage of a universal life policy is that it offers you a way to build tax deferred assets, and the value you build may never be taxed if it remains in the policy and is paid out as a death benefit.

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