**Universal Life Insurance: A Look At Its Pros And Cons

Universal Life Insurance: A Look At Its Pros And Cons

Universal life insurance— it may sound good for everyone. After all, it’s universal. However, just like any other thing in life, universal life insurance also has its own advantages and disadvantages. For some, the pros may overshadow the cons, yet for some, it might be the other way around. Keep reading to learn more aboutuniversal life insurance pros and cons to help you in deciding what universal life insurance is right for you!

What Is Universal Life Insurance

Before we proceed to the pros and cons, let us first discuss what really it is. Universal life insurance is a kind of permanent policy, which may provide coverage for the remainder of your life. Moreover, you won’t need to worry about renewing the policy every 5, 10, or 20 years, unlike the term insurance. Nonetheless, if you wish to cancel at any given time, you will actually have the capability to withdraw on some of the money that you’ve paid in that particular policy.

Universal life insurance is an adjustable kind of permanent life insurance, which allows you in making changes to two major parts of the policy –the death benefit and premium. These, in turn, may affect the cash value of the policy. The universal life associates the term life’s pure insurance elements with the whole life insurance’s savings account features.

It might be purchased by individuals, yet is regularly offered by various employers as group universal insurance, as well.

Pros Of Universal Life Insurance

There are numerous benefits or pros to having universal life insurance versus a term life insurance policy or whole life insurance policy.

1. Lifetime Coverage

One reason why most people get universal life insurance is for them to have life insurance coverage for life. This gives you an assurance that the beneficiaries of your life insurance are being taken care of, regardless of your age when you pass away.

2. Flexible Premiums

When you get your life insurance policy for the first time, you might need a lot of disposable income, which you might wish to put to your life insurance policy. Nonetheless, we all go through rough patches where money might be tighter than it was before. With universal life insurance, you do not need to worry about making similar premiums, as you might afford before. You might also be able to adjust your premium, contingent on your capacity to pay, as well as reduce the death benefit, in order to make it much more affordable.

3. Tax-Deferred

The death benefit that comes from life insurance isn’t taxed, except when your estate is over the limit of the state or federal estate. Cash accumulation causes tax deferment. With the universal life insurance policy, cash may be borrowed against or might be withdrawn. Remember: If the money is borrowed, the insurance company commonly charges a certain rate of interest on the borrowed money. In case that it is withdrawn, the money must be subjected to tax and fees on any amount over the basis.

4. Cash Value

Universal life insurance builds cash value. If a life insurance policy has cash value, it just means that you might be able to access that cash while you are still alive. The amount available will depend on the amount you’ve already paid in the life insurance policy. Remember –the more you pay, the more cash you’ll have.

Cons of Universal Life Insurance

Even though the pros of universal life insurance are quite astounding, there are also some cons.

1. Not 100% Safe

There are several universal life insurances out there which are not totally safe and carry a certain level of risk. The main risk that comes with it is getting stuck with much higher premium, which can’t be paid. Nonetheless, you can still find guaranteed universal insurances which offer a fixed premium at a lower price, compared to whole life insurance, including One Source Benefits.

2. Cash Value Has To Be Repaid

Even though you have cash value for your own policy, it isn’t forever –it’s a loan. And just like most loans, you need to pay it back. Further, if you borrow from the accumulated cash value, it might risk the value of your death benefit. This is because the insurance company will use your death benefit as the collateral on your policy loan.

3. Cost

This is the biggest disadvantage of UL insurance –it costs more than the life term insurance. Although premiums are flexible, you need to pay a lot into the policy so that it will be worth anything. In fact, universal life insurance is commonly at least three times the cost of the term life insurance.

The Takeaway

While we wish this universal life insurance pros and cons list is beneficial, the real question stays: is a universal life insurance a good thing? Well, if you think you must give the people you love life insurance protection for the entirety of your life, then Universal Life Insurance may really be right for you!

If you need some trustworthy insurance advice, turn to One Source Benefits. I will help you in figuring out what life insurance policy is the best for you and your life situation. So what are you waiting for? Give me a call today at 1-877-549-1212 and let us talk about what I can do for you!