When considering universal life insurance, it’s crucial to evaluate your specific financial goals and consult with a qualified insurance professional who can guide you in selecting the right policy for your needs.
What is Universal Life Insurance?
Universal life insurance might be the best option for you if you’re looking for a life insurance policy that provides lifetime protection. A guaranteed death benefit, access to the policy’s cash value, and the ability to change your premium payments and death benefits are all features of universal life insurance.
Universal life policies offer flexibility in terms of premium payments and death benefits, but they come with fewer guarantees compared to whole-life policies. Here are things to know about universal life insurance:
- Death Benefit: Like all life insurance policies, universal life insurance provides a death benefit to your beneficiaries in the event of your passing. This can help provide financial security for your loved ones and cover expenses such as funeral costs, outstanding debts, and living expenses.
- Cash Value: Universal life insurance also has a savings component, known as the cash value. A portion of your premium payments goes into the cash value, which earns interest over time. You can access the cash value through withdrawals or loans, which can be used for a variety of purposes, such as supplementing retirement income or paying for unexpected expenses.
- Flexibility: One of the biggest benefits of universal life insurance is its flexibility. You can adjust your premium payments and death benefit as your needs change over time. You can also choose how your cash value is invested, giving you more control over your savings.
- Tax Advantages: The death benefit is generally tax-free to your beneficiaries, and the cash value grows tax-deferred. You can also borrow from the cash value tax-free, as long as the policy remains in force.
- Estate Planning: Universal life insurance can be a valuable tool for estate planning. The death benefit can help cover estate taxes and provide liquidity to your heirs, while the cash value can be used to equalize inheritances or provide additional income to a surviving spouse.