The Flexibility of Universal Life Insurance
Why is universal life insurance considered to be a “flexible” policy? Well, first you have to really understand what a universal life policy really is. When you purchase a universal life policy, the insurer puts a portion of every month’s premiums into an interest-bearing account. Each month this pool of money continues to grow, minus the cost of insurance. Over time this cash value build up gives you the ability borrow against it giving you more financial freedom.
Unlike whole life insurance which has very strict monthly payments, universal life’s premiums are flexible. Imagine you hit a stretch in your life where you’ve truly fallen on financially hard times. You’ve been unemployed longer than you expected and now you’re worried about paying for the policy. A universal life policy would work well in this situation because you could stop paying on it temporarily until your back on your feet. The internal cash value that you paid on the policy could keep it going until such time that you’re able to start making payments again.
Sometimes later in life, we look at all of our expenses and as we head towards retirement we want to eliminate as many of them as possible. Part of the flexibility of a universal life insurance policy is you can always pay it up early. You can actually set a schedule to have the policy paid up so that by the time you retire, you could still have the coverage in place until you pass away, but no longer have to make payments in your retirement years.
So when you’re investigating life insurance and thinking that maybe you want to save money and go the term route, consider spending a little more money for the flexibility that a universal life insurance policy has to offer.
About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com.