UNIVERSAL LIFE INSURANCE? | Whole Life Insurance with Flexibility

Amelia is looking for flexibility. Flexibility in premium payments that is. Amelia decided to go for a permanent life insurance that has more flexibility in paying premiums. So she chose Universal Life Insurance. Stick around and learn more about this type of life insurance.
Let’s start with the big question. What is Universal Life Insurance? Universal life insurance is a type of permanent life insurance. This means that it provides coverage for the entire lifetime of the policyholder if premiums are paid. Investment savings are part of universal life insurance. The cost is similar to term life insurance. Most policies allow for flexible premiums. There are also policies that specify a fixed monthly payment.
Compared to whole life insurance, Universal Life offers more flexibility. Policies can be adjusted to meet changing needs. That includes changing the premiums and the death benefit.
Premiums for universal life insurance include a cost of insurance amount and a savings component called cash value.
Insurance costs are the minimum amount of premium payments required to maintain an active policy. It includes several different items bundled together. Costs include mortality, policy administration, and other associated expenses. Insurer's pricing will differ based on insured risk, age, and insurability. Checkout our other video on how you can reduce premiums for life insurance.
Policyholders must plan for ever-rising insurance costs. There may not be enough cash value, depending on the credited interest, to keep the policy in force, resulting in higher premium payments. In order for the policy to remain in effect, missed payments must be made within a specific timeframe.
In universal life policies, excess premiums accumulate in the cash value portion. As the insured ages, the cost of insurance increases. Nevertheless, accumulated cash value may be sufficient to pay insurance increases.
The cash value of an universal life policy can accrue, similar to a savings account. The cash value earns interest which is based on either the current market rate or the minimum rate. Afterward, a portion of the cash value may be withdrawn without losing the death benefit guarantee. A death benefit policy allows beneficiaries only to receive the death benefit. However, cash value remains with the insurance company.
Tax-free borrowing against cash value is possible for policies with universal life insurance. Cash surrender fees and interest are charged if they do. Death benefits are reduced by the amount of unpaid loans, along with unpaid interest.
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----- VIDEO CONTENT -----
00:00 - INTRODUCTION
00:20 - UNIVERSAL LIFE INSURANCE
00:35 - INVESTMENT SAVINGS
01:00 – FLEXIBILITY
01:30 - PLAN FOR COST
01:50 - EXCESS PREMIUMS

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