| What is a Universal Life Insurance Policy? |
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| Written by Allen Nolan |
| Wednesday, 30 December 2009 19:45 |
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A Universal life insurance policy is a type of permanent insurance, which is based off of a cash value. It is almost like making an investment, the way this type of insurance works. But can it benefit you and your family? You may be surprised.
What is a universal life insurance policy? It is a class of permanent insurance that is based on a cash value. It's almost like making an investment. But is it right for you? Read more and find out! Investing Basics When you invest in anything, you pay into it, usually at a fixed percentage. Why fixed? Because it is the simpleist way to ascertain your possible out come over the course of time. However, every so often you may change it up, and put a bit more, or a bit less. This changes things up, and creates a different out come at the end of your period. This example above is basically how universal life insurance works; you pay a fixed amount in your premiums, just like any other policy. However, in a universal policy, if you decide to over pay, it will increase the cash value of your policy, which increases your benefit disbursement in the long run. Now here's the flip side If for some reason you miss a payment, or underpay, this is automatically taken off the over payments that were made. It's almost like you created a buffer zone for your payments. Who knows, you might hit a rough spot, and this is a good way to make ends meet, even if it is a little indirect. Sound interesting so far? What a Universal Insurance Policy Is Basically, it's just an additional method of investing, and creating a larger portfolio of investments. The difference is that this investment doesn't pay until you die. This is certainly not your run-of-the-mill insurance policy, but it does have its merits, where you can boost your policy size, and give a better monetary payout in the end. That is the main benefit for having universal insurance, being able to increase the eventual payout as much as you want. You must admit, it's a way to get added insurance as time goes on, without re-writing the policy. Another thing to remember as well, is that the cash value also gains interest for the entire length of the policy. This gives you an even larger return on investment when it is cashed in. Assess: Is a Universal Policy Good for You? Yes, a universal life insurance policy most definitely has its benefits; but is universal life the best policy for you? If you planned to take full advantage of the over-payment clause, it just might be. If not, then perhaps you should remain with a standard whole life or term policy instead, as one of them just might be more suited for your life style. Why bother selecting a policy with special features like that if you aren't going to use them? Instead, use that investment to purchase the life insurance policy that suits your needs. Here's More FREE Life Insurance Information! DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Don't get confused -- get answers! If the universal plan isn't for you, here's FREE whole life insurance information. |