Universal Life Insurance

Universal life insurance is also known as adjustable life insurance. As long as premiums are paid, a death benefit is paid to the beneficiary. These policies are unlike whole life insurance policies because they offer the policy owner some flexibility to change the premium payments and death benefit.

The death benefit may be amplified subject to insurability or decreased, and the premiums can also be increased and decreased as well as skipped. There are two options for the death benefit with universal life insurance. There is the option of a level death benefit or an increasing death benefit. Although premium payments are flexible, a universal life policy will generally have a target premium, which is the suggested annual premium payment. The target premium for some companies is adequate to keep the policy in-force to age 100; yet, this is not guaranteed.

Universal life insurance policies also collect cash values on a tax-deferred basis. Most universal life insurance policies also provide a guaranteed rate of return on the policy's cash value. But this is not always the case, it is possible a policy will not accumulate cash value if the insurance company's administrative expenses increase, mortality assumptions are altered, investment portfolio does not meet as expected, or the policy premium payments are inadequate.


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