Universal life insurance isn't 'bad' but it is sometimes not used properly. Unlike traditional whole life and simple term policies which have a set payment and benefit amount, universal life offers much more flexibility. With this flexibility comes responsibility. Certain policies and premiums are only guaranteed to a certain age and sometimes people will not make the full payments. This can lead to shortages and problems down the road.
This is one of the many reasons you should be 100% upfront with your agent about what your goals are. There are several situations where a universal policy is the BEST choice for a particular client, but there are many when it is not.
"My friend/coworker/brother just got a universal life policy and I want one, too". No. Let's not start building the roof and add the walls later... Let's start from the beginning and figure out what you're REALLY looking for this policy to do. After that, we can go from there.
There are many past universal life policy holders who consider it to be bad because they have been burned by universal life. Most often, this occurred because the projected interest rate for the policy was unrealistically high. This caused their policies to lapse much sooner than expected.
Since then, some universal life policies now offer a guaranteed minimum interest rate and maximum COI (cost of insurance). However long your policy is shown to last with those variables is how long your policy is guaranteed to not lapse. In my opinion, universal life insurance is not bad as long as consumers understand the guarantees, or lack thereof.
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This is one of the many reasons you should be 100% upfront with your agent about what your goals are. There are several situations where a universal policy is the BEST choice for a particular client, but there are many when it is not.
"My friend/coworker/brother just got a universal life policy and I want one, too". No. Let's not start building the roof and add the walls later... Let's start from the beginning and figure out what you're REALLY looking for this policy to do. After that, we can go from there.
Since then, some universal life policies now offer a guaranteed minimum interest rate and maximum COI (cost of insurance). However long your policy is shown to last with those variables is how long your policy is guaranteed to not lapse. In my opinion, universal life insurance is not bad as long as consumers understand the guarantees, or lack thereof.