Understanding Universal Life Coverage
Leaving a financial benefit for your family when you pass on is one of the most fulfilling things in life. Universal life insurance (UL) allows you to save for your future while at the same time giving you access to your accumulated cash value. One feature of the universal life coverage is that it runs throughout your life until you pass on as long as you maintain a flexible premium payment plan.
UL remains a favorite for most people due to their broad range of benefits. Insurers break down the premiums into two fold, which comprises of cost of insurance and the saving component. Policyholders must pay monthly premiums to avoid a lapse on their policy. Insurance companies allow policyholders to adjust their premiums and coverage amounts to meet their families changing needs and budgets. Additionally, you can skip premiums payment as long as you have an accumulated cash value to cover the insurance payments.
The cash value is the tax-deferred amount that the policyholder saves every month and earns interests over time. The insured can access a portion of the cash value at any time without affecting their guaranteed death benefit. Additionally, they can borrow against the cash value and repay the loaned amount in time to avoid a reduction in the total death benefit.
Beneficiaries usually enjoy a death benefit that is free from income taxes. The policyholders can always choose the benefit options that they want for their beneficiaries that may include a benefit equal to the face amount of the policy or one that incorporates the face amount and the cash value together.
Universal life coverage is ideal for people seeking to save some income for their family to use in education or mortgage payment. It also allows one to enjoy some amount of income in their lifetime from their accumulated cash value. Remember that you can increase or decrease the death benefit and premiums to fit your budget and family needs.