Universal life insurance

Term insurance is meant for a specific period of time, for example 20 years. But a universal life insurance is in effect for the rest of your life. This very nature makes it a permanent life insurance. Also, it has some similarities with term insurance. It has low-cost premiums and savings options

A universal life insurance is more flexible than other whole life policies. The premium of this policy generally has two components – (1) cost of insurance (2) cash value

A universal policy is almost like a savings account as it accumulates cash value. The flexibility of universal insurance policy gives the policyholder the opportunity to withdraw a certain portion of the cash value keeping the death benefits unharmed.

The cash value of the universal insurance policy becomes extremely helpful to the insured person because it enables him to get loans against it. 

However, if the loan is not paid off at specified time, the death benefits might be affected. There are two types of universal life insurance policy – (1) indexed universal life insurance – if the market performs good, the cash value rises. If the market does not perform well, the value decreases. Thus, affects your premium costs. (2) guaranteed universal life insurance – the premium is fixed; thus, the rate of interest is also fixed throughout the specific period of the policy.

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