Compared to other insurance policies with predetermined benefits, a universal life insurance (ULI) allows the insurance beneficiary to choose the premium and benefits while at the same time incorporating a vehicle for savings. In other words, this type of life insurance combines a term life insurance policy along with an accumulating savings account that is tax-deferred. Being a permanent life insurance that is based on the value of the cash, premium payments beyond the cost of the policy are added to its cash value. This cash value is then credited with interest per month.
Usability of ULI
The most common use of the ULI is for final expenses of the beneficiary like burial, funeral, and other bills incurred during the hospitalization. Income replacement is also covered by this policy to provide monetary assistance to the surviving spouse and dependent children if there are any. If the insurance holder is left with debts, ULI covers the amount to pay off personal and even business-related obligations. These obligations may come in the form of home mortgage or loans for operating business. Other benefits as well are available similar to other life insurance coverage.
Benefits for the living policyholder
Similar to other types of life insurance, the ULI is a great source of benefits for the policyholder. Benefits include loans and premium payment withdrawals as well as pension funding and tax planning among others. The ULI allows the policyholder to be granted with a loan in proportion to the associated value of the policy. Since the loan is taken against the total premium payments of the policy owner, the loaned principal may not be paid anymore except for the loan interest. If not paid, the loan interest will be deducted from policy’s current cash value. Allowing regular withdrawals is also one of the benefits of ULI. This benefit can serve as tax-free income for the policyholder.
The Universal Life Insurance-One of the many great attributes of a Universal Life Insurance policy is its flexibility. These polices can be illustrated in many different ways in order to meet any goal. They are different from Whole Life Insurance in the sense that premiums can be reduced or increased at any time whereas with a whole life policy the premium is fixed for life and must be paid to keep the policy from lapsing no matter what the cash value of the policy may be.
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