Universal Life Insurance

One of the best life insurance policies available today is universal life insurance. In many respects, a universal life insurance policy is similar to every other type of life insurance. It has a premium and a death benefit amount that is paid to the beneficiary. Apart from that though, universal life differs from other life insurance policies in so many different ways. Here's how it works.

What Is Universal Life?

A universal life policy takes the best life insurance features from term life insurance and whole life,  and combines them together in one. What you will have is the protection of term life insurance, along with the cash value of a whole life policy. Even better is that the growth of this cash value is tied to other outside investments, such as mutual funds, etc. A universal life insurance policy can grow very quickly and at a high rate of interest if done right. An important point to note is that this growth is also tax-deferred and guaranteed to be no less than 4%. So you can see there will be huge tax benefits to this type of policy. Universal life gives you much more control.

Flexibility

The premiums with a universal life policy are quite flexible. You can pay more or less than the premium charged, and pay as often as you like. Think of it as a savings account in that regard. You can add funds to your policy at any time. You also have the control to increase (subject to insurability) or decrease the death benefit to best fit your present situation.

Taking Money Out

One of the best life insurance features of universal life is the ease in getting money out of it when you really need it. You can borrow from the cash value at any time. Most policies have a $500 minimum withdrawal. Again, it's like a savings account in this regard, only with a much higher rate of return. There are also great tax benefits to the policyholder with universal life. Under current tax laws, life insurance proceeds are usually always income tax free to the beneficiary.

As you can see, having a universal life policy can provide you with numerous benefits. As with all insurance plans, make sure you fully understand the policy, and consult with your local insurance agent to see if universal life is right for you.