Do Universal Life Insurance Premiums Increase?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Universal Life Insurance premiums will not increase if you purchase a policy where they are guaranteed not to increase. If you do not buy a policy with that type guarantee, there is a chance your premiums will need to be increased for your policy to stay in effect as long as you want it to. The good news is that UL policies can be purchased with lifetime premium guarantees, or guarantees for the premium to stay level for shorter periods of time, at a slightly lower price.
    Answered on July 18, 2014
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  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    A universal life policy differs from a whole life type policy in that the accumulation portion of the policy is not the responsibility of the insurance company, rather it is the responsibility of the policy owner.  This allows the owner to change deposits to suit their ability to accumulate money.  It could be that at some future point that the policy will start to have declining accumulations because the cost of insurance could exceed the owner’s deposits.  The owner then must either increase the rate of deposits, decrease the coverage or face a collapse of the policy. 
    Answered on July 18, 2014
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  3. 4249 POINTS
    Gary Lane
    President, Lane Independent Agency, Southern California
    Yes, premiums can increase with a universal policy. They do not normally increase, but in a period of extreme market collapse, they have done so. Generally now, there are terms which can guarantee that not happening. But if your investments fell sharply, additional payments over the guaranteed payment, may be needed. A way to avoid this ever happening is to purchase indexed universal life. With this product, you participate in much of the market's growth, but are guaranteed that you will not lose money and lock in your profits regularly. Talk with an agent. Thank you. GARY LANE.
    Answered on July 18, 2014
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  4. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! Universal life policies are not like other life insurance policies. A term policy has clearly defined time periods of coverage and payment amounts and frequency. A whole life policy has a set payment, and a certain end date (yours). A universal, or variable, policy is not so clearly defined, and therefore is not the best policy for some people. In this type of policy, your payments, and length of coverage are dependent upon investment performance, and if the investments do poorly, the policy alters to adjust. That means your payments may increase dramatically, your coverage shorten, or your policy collapses and goes belly up. Your policy may make guarantees about these things, you will need to check with your agent and see. Good luck. Thanks for asking!
    Answered on July 23, 2014
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  5. 11783 POINTS
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    Larry GilmorePRO
    Agent Owner, Gilmore Insurance Services, Marysville, Washington State
    Do Universal life premiums increase? Yes and no. While the outside premium you pay may not change over time, the internal cost of term insurance increases within the policy. The thing is part of the set up of universal life is a side account where excess premium is deposited into either a fixed account or a variable one. These accounts earn returns over time and the cash values actually help with the cost of insurance within the policy.
    Answered on October 11, 2015
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  6. 1976 POINTS
    Ronald Hinch
    Regional Marketing Director, Capital Choice Financial Group,
    Universal Life insurance is often called flexible premium life insurance because the policy holder is permitted to pay a premium that he can afford. A Universal Life policy will not have premium increases if the policy holder pays the "target" premium but usually it is much higher than the one that is chosen. This is how many policy holders get into trouble later on. Universal life insurance is very expensive because it combines annual renewable term insurance and a cash value account that is there essentially to offset the increased cost of coverage. When the cash values are depleted the policy will lapse. A "good" agent will get back to the client and "review" his coverage. At this time he will churn the cash values accumulated into a new policy generating another fat commission to the agent. The bottom line is that the best plan is the purchase of a level term policy, paying off debt, and building a retirement savings outside the policy.
    Answered on July 10, 2016
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