Universal life insurance is a form of permanent life insurance that ensures a specific, guaranteed payoff at the death of the policy holder, as long as premium payments continue to be made. These policies are meant to be maintained over a long period of time, and are best used by those who expect to have life insurance needs long after their children graduate college and after home mortgages have been paid off.
Universal life insurance policies typically cost more than term life insurance policies due to the nature and duration of coverage. Those with shorter, fixed term life insurance needs should look into a term life insurance policy, which will be a cheaper policy, and one that more closely fits their needs.
Universal Life Adjustments
A universal life insurance policy allows you to make adjustable premium payments to more closely reflect your financial position at any given time. For instance, you can make larger premium payments when you have additional income, and reduce your premium payments in times of economic hardship.
In order to accommodate changing insurance needs, most universal life policies give you the ability to change your death benefit payoff.
Permanent universal life insurance policies generate a cash value. This means that if you experience a temporary loss of income and can no longer afford insurance premiums, the cash value of the policy can be used to make premium payments for a period of time.
Face Value and Cash Value of Universal Life Policies
The face value of a life insurance policy is the amount of money your beneficiary will receive when the policy pays off at maturity. Cash value, also known as surrender value, is the amount of money available to you if the policy is surrendered or cancelled before its maturity or before the policy holder dies.
The cash value of your universal life insurance policy increases with each premium payment and can provide a good return on investment depending on current interest rates and economic conditions. Contributions to the policy cash value are also tax deferred, much like retirement accounts.
Borrowing Against a Universal Life Insurance Policy
Since these policies have a true cash value, they can be borrowed against and used as collateral for loans. There are many programs available for people who want to borrow money against the cash value of their insurance policy to obtain funds for:
- Down payment of a home
- Education or tuition needs of children
- Supplemental retirement income.
Contact us to see if you can save money on your insurance by speaking to a professional independent insurance agent at Journey Insurance.
Let us sift through the hundreds of insurance programs to find you the most competitive rates available. Let us do the paperwork while you spend your time doing something you actually enjoy!
Journey Insurance Agency * Irvine, California * 888.323.7480
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