What is Universal Life Insurance and do I need it?
Are you looking for a life insurance product that will provide coverage for the duration of your lifetime?
Do you want flexibility of both premium and benefit payment?
If you answered ‘yes’ to these questions, then Universal Life Insurance coverage could be the right product for you. Comprising three parts: death benefit, cash accumulation and flexible premiums, Universal Life Insurance can help to ensure that your loved ones will be taken care of.
- Provides coverage for the duration of your life
- Option to pay flexible premiums
- Allows accumulation of a cash value
- Death benefit and any cash value are typically ‘tax deferred’
- Can operate as an investment product in addition to providing life insurance coverage
- A loan can often be taken against this type of policy
Payable to your beneficiaries in the event of your death, this can be done in one of two ways:
Level death benefit or benefit type A – with this type of benefit, your loved ones will be paid a fixed amount in the event of your death. This amount remains the same for the entirety of the coverage.
Death benefit type B – with this benefit any accumulated cash value of your policy can be added to the fixed amount and paid as a combined sum.
Cash Accumulation Portion
A portion of your premiums paid for are invested by your insurance provider. This allows your Universal Life Insurance coverage to accumulate a cash value that you may be able to withdraw or borrow against.
Your insurance provider requires you to cover the cost of the life insurance portion of your policy but the amount that is invested in the cash accumulation value, can be flexible. This allows you to reduce or increase your contribution depending upon your personal circumstances.