Universal Life Insurance Policies
Life insurance is one of the most important forms of protection people can have for their families. While there are many different forms of life insurance, one of the most popular is universal life insurance. Designed primarily to provide a death benefit to one's family, it also offers many other benefits that can prove useful along the way.
The biggest advantage of universal life is it not only builds toward a death benefit amount, but also accrues interest based on the most recent rates. The amount earned through interest is added to the policy's cash value, helping it increase in value. To pay for the cost of insurance coverage and any fees associated with it, a portion of the premium payment is used for this purpose.
People of all ages like universal life coverage because it offers a generous amount of flexibility at a much lower cost than other forms of life insurance. For example, policyholders can withdraw money from the policy's cash value amount without fear of penalty fees. The death benefit amount can be changed at any time, and extra premiums can also be applied toward the policy. But perhaps the biggest benefit is the ability to surrender the policy after keeping it 15 years. For those who choose to do so, they can be paid the accumulated cash value without being penalized by a surrender fee.
The only risk with universal life insurance involves the interest rates it relies on for the cash value to grow. When interest rates are high, the cash value will grow quite substantially. However, if interest rates dip then the cash value of the policy will decrease as company fees and the costs of insurance coverage are applied. To guard against this happening, it's a good idea to make additional premium payments when interest rates are low. This will protect the policy's cash value and eliminate the risk of losing some or all of the value that had been previously accumulated, allowing a family to have peace of mind while making sure funding will be available for final expenses or other needs.