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Universal life insurance offers one of the most flexible forms of life insurance available. This type of life insurance policy offers protection in the event of the insured's death, but also has an investment option. The investment portion is flexible, allowing the individual to increase or decrease the amount of coverage that is needed throughout the policy. However, there are parameters outlined within each policy that you will have to follow. There will be a predetermined amount that the insurer cannot go below and if the coverage is increased there may be underwriting required. It is important to be informed about all of your policy's terms and conditions. What is universal life insurance and how do they work? Universal policies offer the insured the control of how much and how often premiums are paid. • One choice of payment is the lump sum payment. This will increase the amount of the policy's cash value and death benefit. The cash value of this policy will be tax-deferred. • If at anytime you experience financial hardship, the universal life insurance policy will allow you the freedom to lower the amount of your premiums for a period of time. The value of the policy will change when you choose to do this because the amount of money that you choose to lower the policy by is taken from the investment portion of the premium. It is important to note that some insurance companies will charge a fee for each payment. • If at anytime you find yourself in need of some extra money, it is possible to withdraw the amount from the cash value of the policy. There may be a limit to the amount that you can withdraw within a given time period. Once again, it is important to look at all the information given about your policy. Rates: Each insurance company has their own method of determining the rates at which the policy will earn interest. There are companies that will guarantee the policy will earn interest at the rate, which is current with their business. There are other companies who are now offering a fixed rate for the life of the policy, no matter what the rate happens to go up or fall down to. In order to find the best rates on a universal life insurance policy you will need to shop around. Reading over the policy very carefully is extremely important; remember it never hurts to ask if you have any questions.
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