Universal Life Insurance

Universal life insurance is the most involved and comprehensive form of life insurance available.

Universal life insurance is a form of whole life insurance;  it guarantees a death benefit and has a built in savings component. It differs in that its investment component is a lot more involved, meaning you decide where your money is invested. Also, your policy is broken down for you so you can see exactly where your premiums are going. This administrative transparency can either be seen as a benefit, or as unnecessary depending on your approach to personal finance.

The forced savings that accumulate over time can have many benefits. As an example, a retired couple who has been paying into a universal plan may opt to cancel their coverage and receive the cash surrender value to supplement their retirement expenses. Also many plans allow you to withdraw a portion of the cash value without forfeiting your coverage. Another benefit is that you may borrow against your cash value in the form of a policy loan.

Universal life insurance can also pay dividends. Since it is a form of whole life insurance, if your investments have a particularly profitable year you can receive dividends. Although this this isn’t a guarantee, many universal life insurance policy holders use their dividends to pay a large portion of their premiums.