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What is universal life insurance?

Life is full of changes, transitions, growth—and sometimes disruptions. That’s why it may be important for you to consider a universal life insurance policy that offers you flexibility and options. Learn about this coverage and see if it could be right for you!

What is universal life insurance?

Universal life insurance is a type of permanent life insurance that offers lifelong protection with the unique flexibility to adjust your coverage and premium amounts. Like other types of permanent life insurance, universal life builds cash value that allows you to accumulate money tax deferred.

How do universal life insurance premiums work?

One of the biggest advantages of universal life insurance is the ability to adjust your premiums. During times when you have extra money available, you can pay more than your minimum premium amount, and the extra money will be added to your cash value where it will accumulate interest.

On the other hand, if your budget is tight and your policy has accumulated a high enough cash value, you may lower or skip premium payments without threat of your coverage ending.

How does universal life cash value grow?

Universal life insurance accumulates cash value over time. Your cash value grows from your deposits and interest earned. Some universal life policies offer a guaranteed minimum interest rate, such as 3%. Other policies offer a smaller minimum interest rate—such as 1%—but give you the opportunity for greater growth with S&P 500-linked growth potential.

Depending on your policy, you’ll be able to access your cash value through loans or withdrawals to help you meet your financial goals. It’s important to note that with some universal life insurance policies, cash value isn’t passed along with your death benefit; you must withdraw the money while you’re alive.

How does a universal life insurance death benefit work?

Depending on insurer and product, universal life insurance can offer unique death benefit options. Some policies give you the option to decrease your death benefit, which is useful if you one day need less coverage. Other insurers also give you the option to increase your death benefit as your needs change. Either way, death benefits are generally tax-free to named beneficiaries.

What are some universal life insurance considerations?

Of all the life insurance products available, universal life insurance offers you the most control. However, with this flexibility a bit of policy management is required on your part. If you’re skipping or lowering premium payments, it’s important to ensure your policy has enough cash value; if your policy isn’t adequately funded, your coverage could end.

If you’re interested in permanent life insurance that features consistent premiums, a stable death benefit, and access to cash value, then a whole life insurance policy may be a better fit for you.

Is universal life insurance right for you?

If you’re unsure what type of life insurance policy is best for your needs and budget, Bankers Life professionals are here to help! Our agents can walk you through your options and help you build a strategy that helps protect your financial security and peace of mind.

Insurers and their representatives are not permitted by law to offer tax or legal advice. The general and educational information here supports the sales, marketing or service of insurance policies. Based upon individuals’ particular circumstances and objectives, they should seek specific advice from their own qualified and duly-licensed independent tax or legal advisors.