Universal Life is a unique product. The advantages of a Universal Life Policy are: Flexible Premiums, you can put more into the policy to act as a savings and enhance cash accumulation. You can skip payments as long as there is enough in the cash value to continue the insurance. You can decrease the face amount or increase the face amount (as long as your health qualifies). It has a competitive interest rate. It is a good way to get a lot of insurance for a lower premium than whole Life.
The disadvantages: It must be funded properly. Because you can skip or put less into the policy than the Target Premium, the policy could lose its death benefit. Picture a bucket of money. The bucket has a hole in it and it is dripping. If the water (money) going into the bucket is greater than the water going out of the bucket, you are OK. But if you do not have enough going into the bucket and it is draining faster than being filled, then the water will eventually run out. When that happens the insurance will cease.
Universal Life is a good product, but not for everyone.
You do not need any particular life insurance product. You need to establish your financial profile, risk tolerance and economic goals. If universal life is to be part of that based on product suitability, then so be it. There are four types of universal life products: current assumption, index, variable and guaranteed universal life. The first three should be explored for tax advantaged, supplemental retirement income scenarios and the last one for permanent coverage to indemnify your beneficiaries.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Why do I need a universal life insurance policy? Usually because you want a stable premium and cannot afford a true whole life product to insure yourself. You are looking for a longer period of time to be covered than a term policy can offer. I would hope that if a person chooses UL, that they choose guaranteed universal life as that guarantee makes a UL a more stable product.
You may not need Universal Life Insurance. If you have a temporary need and want a large policy for the lowest possible price, Term Life Insurance would probably work best. If you want a small final expense policy, Whole Life is easiest to get, and comes in the smallest face amounts. Where you may choose Universal Life is if you want a low cost permanent product of a substantial face amount but with little to no cash value (GUL), or if you want to use your life insurance as a type of investment along with death benefit (VUL or IUL).
Simply put, term life insurance, whole-life life insurance, universal life insurance and annuities etc. are very important things to think about to protect your financial future. Generally, speaking the best time to think about these products is when you are talking to a licensed insurance agent and you can think them over together.
All of these products, or a combination of these products, may suit your individual needs. I work for a few companies that offer high-cash value products that can be used for various business ventures or personal wealth-building opportunities, if set up properly. Therefore, when considering any of these insurance products it is usually best to meet with an agent so they can help you figure out which products you need, can afford and find out if you qualify for them.
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The disadvantages: It must be funded properly. Because you can skip or put less into the policy than the Target Premium, the policy could lose its death benefit. Picture a bucket of money. The bucket has a hole in it and it is dripping. If the water (money) going into the bucket is greater than the water going out of the bucket, you are OK. But if you do not have enough going into the bucket and it is draining faster than being filled, then the water will eventually run out. When that happens the insurance will cease.
Universal Life is a good product, but not for everyone.
All of these products, or a combination of these products, may suit your individual needs. I work for a few companies that offer high-cash value products that can be used for various business ventures or personal wealth-building opportunities, if set up properly. Therefore, when considering any of these insurance products it is usually best to meet with an agent so they can help you figure out which products you need, can afford and find out if you qualify for them.