Understanding Universal Life Insurance

Universal life insurance offsets term and whole life insurance. Universal life insurance will include a guaranteed rate of return.

Universal life insurance requires the payment of premiums, and as a result, your beneficiaries will be paid a specific amount of money upon your death. Your payments are utilized by the insurance company in two ways: 1) pay for the pure cost of the policy, and 2) allocate funds to a general investment portfolio.

The allocation of funds within a portfolio is controlled by an investment specialist employed by the insurance company; however, you still have some management privileges as a result of selecting this type of policy. These privileges allow you to dictate when and how much money you will apply towards premiums as well as alter the total amount of the policy to accommodate your financial capabilities.

In addition, some provisions permit early withdrawal and loans against the policy. Withdrawals are not subject to taxes unless you request more than you have paid in premiums. Also, if you have paid into the policy an amount that exceeds the required premiums and associated fees for the life of the policy, you will be able to discontinue payments with the knowledge that the policy is available to you and your beneficiaries.

A financial expert may help by giving you tools and information needed to help protect your future

This information is presented to educate the reader and does not constitute professional tax and legal advice.

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