The Pros and Cons of Universal Life Insurance

for replacing a premium

A contract between a policyholder of insurance and an insurance company in which the
customer agrees to pay a sum of money for replacing a premium upon his death or after some specific time is known as life insurance. The strategic uses of life insurance help you to address your goals. It is a way to provide money for your family when you are no longer here. This is the best way for those who care much about their family or loved ones. This way is used to maximize the wealth and pass it on to the people you love or care about. There is much less risk in this process. Life insurance helps families accomplish financial objectives such as burial expenses, cost of administration, other settlement costs, and estate taxes.

A Permanent life Insurance

Universal Life insurance is a type of life insurance that is permanent. It saves the investments of the policyholders by getting paid low premiums. This policy requires only a small amount of money for the payment of premiums without tax issues in case investors withdraw their accumulated assets against the policy.

Function of UL Insurance Policy

Universal Life Insurance is dependent upon essential factors including insurance and a component containing cash value. The insurance contributes in death breath benefit after the death of the policyholder while the cash value component includes the extra money that remains left from your premium payment after the insurance company takes the insurance cost and other fees.
Rather than a term life insurance policy that works for only a limited time, a permanent life insurance policy ensures a lifetime. ULI works in the same way. It plays its role as long as sufficient premiums are paid to keep the policy in force and provides benefits to fund the expenses at death. The policy gives flexibility not only in the adjustment of your death benefits but also in your premium payment.
A few types of UL insurance policy provide a component containing cash value which allows the customer to withdraw the money out of it. After your death, the death benefit will be reduced for your loved ones when they withdraw money and take loans by the insurance company. But some policyholders prefer an access to cash value component rather than a full payout to their loved ones.


UL life insurance is beneficial due to its flexible policy and increased cash value

  • Flexibility in Premium Payments and Death Benefits

The flexible premiums of the policy allows the size and frequency variation regarding the payments of policyholders. However, the less payment of premium can be challenging which may cause the policy lapse. The assistance of a financial advisor is necessary before preferring any kind of variations in the payment of premium.
The UL insurance policy offers extra coverage regarding death benefits which requires qualification in the medical exam of life insurance. The reduction in this benefit is also possible after a few years of policy activation.

  • Increase in Cash Value

The cash value component increases with the interest earned according to the insurer's rate. Most often, the insurer’s setup rate may also undergo variations.


  • Needs Attention

UL insurance policy requires the attention of policyholders in order to remain in force. A little carelessness of the investor can underfund their account value, leave them with a greater coverage amount and with no insurance and lapse their policy.

Challenging and Risky

Universal Life Insurance seems to be a good product with the rise of interest rates. But the performance of your account will be dropped with no rise in interest rates. Most often, this policy rises with the guaranteed interest rates which are often minimum.
Hence, UL insurance policy is both advantageous and risky for the policyholders.


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