What is Universal Life Insurance?

Universal life insurance is a permanent life insurance policy that was designed as a combination life insurance and investment policy. To understand the investment properties and possible tax advantages of Universal Life Insurance, as compared to other life insurance or other investments, read a full explanation at Universal Life Insurance Rates and Information. If that explanation is a little long, you can find a short and clear summary at: Term vs Whole vs Universal Life Insurance on 247QuoteUS.com! Of course that site also has a good blog post on the basics of comparing universal life insurance with term life insurance and whole life insurance so check there too!

The basic ideas is that the cash value of the policy is seperate from the cost of insurance, and so an insured person is clear about where their premium dollars are going. The premiums, cash value, and even the death benefit are flexible, which is different than most other types of insurance. So premiums paid, that are over the cost of insurance, can go to the cash value account which pays a specified interest rate.

The idea is that many universal life insurance policies have interest rates that are tied to some sort of market index. The S&P 500 is probably one of the most common, and so universal life should return better interest than most other permanent policies. With fixed universal life insurance, sold by insurance agents, and not investment agents, some level of returns are guaranteed, and so risk is greatly reduced.

Of course, enough premiums still have to be paid to keep the policy in force! Universal life insurance can be a handy tool for life insurance coverage and savings, but an insurance shopper really needs to understand what they are buying! Get more help by comparing universal life quotes and finding a qualified universal life insurance agent!

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