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Universal Life Insurance

Many people who are beginning their search for a life insurance policy are often confused about which policy best fits their needs, and more importantly, which fits their wallets. Universal life insurance is one of the most common types of insurance that people purchase, and for many reasons.

Universal life insurance is a permanent form of insurance. It has no expiration date, and the policy has no term associated with it whereupon it will automatically terminate. Universal life insurance is an agreement between the insurer and the policy holder wherein the policy holder makes monthly or yearly premium payments to the insurance provider. All payments above the cost of insurance are credited towards the cash value of the policy. Each month, the money credited is invested and is eligible to receive interest, per the results of the areas in which it is invested and market performance. As the policy earns interest and grows in value, the additional funds earned can be used towards future premium payments, lowering the overall monthly or annual premium costs of the policy, while the value of the policy is maintained.

While universal life insurance may seem similar to other types of insurance such as whole life, it is different in a few ways. First, universal life insurance has flexible premiums while whole life does not. Additionally, the death benefits associated with universal life insurance can be adjusted, either increased or decreased, while the associated benefits with whole life are locked-in and not adjustable. In addition, a universal life policy shifts some of the risk for maintaining the death benefit on the policy holder. Universal life policies will lapse once the cash value is no longer sufficient to provide for the cost of insurance.

Because of this additional risk, universal life policies often come with secondary guarantees of payout, where a certain minimum payment is set and the policy will remain in effect and of full value even if the cash value of the policy drops to zero.

While these policies and their specifications may be extremely confusing, the best way to learn about them and decide which is best for you is to speak to a licensed professional who can help you assess your needs and decide which fits your needs as well as your budget. Taking time to speak with a licensed provider is the best way to determine what is best for you to do. Fill out the form to speak with a professional who can assist you in making an educated decision about life insurance today.

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