Universal Life Insurance

A Savings Component + Lifelong Protection

There are several types of permanent life insurance. The two most common types are universal and whole life. These plans provide life coverage for your entire life, as long as you pay your premiums. But the way universal plans work is somewhat unique. 

If you are considering a universal life (UL) insurance plan, here’s what you need to know.

What Is Life Insurance?

Life insurance is a type of insurance contract that (usually) pays a death benefit to your beneficiaries if you pass while covered. There are two primary types of life insurance, including term life and permanent life. Term life plans cover you for a set period, while permanent life covers you until the end of your life. 

With permanent life insurance options, you also get a cash savings component included in your plan. This cash savings builds value over time as you pay premiums. It may also grow through interest and other market trends.

How Is Universal Life Insurance Different?

Universal life insurance offers many benefits. For example, there are a few additional features that make universal life insurance stand out. They are:

  • You can withdraw and borrow money against the policy’s cash value
  • Your cash value earns interest over time
  • Premiums are flexible 
  • You can change death benefits to increase or decrease premiums

Universal Life vs. Whole Life

Whole life insurance policies have fixed premiums and death benefits, while universal life allows you to change these values to suit your needs. The increased flexibility makes universal life plans a great option for people who are not sure exactly what they will need in the future, even though they know they need some form of life insurance coverage.

What Else Should I Know?

With a universal life plan, you pay premiums every month and a portion of that money goes to building the policy’s cash value. The rest goes toward paying for the death benefit. Once enough money has accumulated, you can withdraw or borrow from that cash value. How much you can borrow and for how long depends on the insurance company and policy you’ve signed. 

It is important to note that borrowing from or withdrawing from your policy can lower your death benefits. Therefore, you should always make an effort to pay the money back when possible.

Do I Need Universal Life Insurance?

If you have long-term savings goals and want to be covered for your entire life, a universal life insurance plan should be right for you. These plans are permanent, so you won’t lose coverage unless you stop paying premiums. They are also able to grow tax-deferred, making it easier to build savings over time.

Talk with a Friendly Agent

If you aren’t sure which type of life insurance is most suitable for you, talk to an agent. Overton Agency is ready to help, so call 501-881-2050.