LifeInsurance

Universal Life Insurance Policy

A universal life insurance policy or UL for short, is a permanent life insurance that offers more flexibility than a regular whole of life cover (WL). There are many types of cover available to choose from; however, with so much choice, people find it hard to know which one to go for. If you are looking for a permanent cover plan that lasts throughout your whole life and not for a term, then you may want to try a universal life policy (UL). You can choose to seek the rates out on your own and compare, or hire a broker.

What is UL cover?

Universal policies divide the premium into savings and insurance. You will be able to shift money between both the savings and insurance portions of the plan, which can be extremely helpful in times of need. If for example the savings portion earns a low return, you can use it instead of using your own outside funds to pay the premium. A universal life insurance policy also differs from a standard whole life cover or joint life cover in that the cash value of your investments grow at a variable rate. This rate is adjusted every month. A universal life insurance policy is like combining the benefit of having a full cover plan that offers a death benefit with an interest-accumulating savings account.

Could You Benefit?

The universal life insurance policy is an investment that would benefit anyone who's looking to be insured into their 70's. The savings would accumulate in this time to become a possible investment. If you don't need to be insured for this long, you may look into getting a term life plan that covers your for specific terms.

However, a term cover will not pay out if you don't pass away during the stated term of your cover, essentially causing you to lose money. If you pass after the stated term, your dependents will not receive payment. Having a policy that lasts throughout the years such as a universal life insurance policy, will give you peace of mind knowing your dependents will be taken care of in the event of your demise. In order for a term policy to be as secure as a WL cover option, you would need a retirement investment savings account along with your policy, which could become a hassle. Unlike other policies, you are able to increase or decrease your death benefit. Each company has its own stipulation as far as when in the plan you can do this. If you run into financial difficulties, you can also borrow against the policy in a similar fashion to a loan. The monthly premiums may change if you do this, so ask the company up front how much more you would need to pay if you were to borrow against your policy.

Things to Consider

If you want a universal life insurance policy, you need to make sure you are going to have the cover for at least 15 years. This is the time when most universal life insurance policy providers pay on any returns. Prices for these policies are competitive, so it is best to use an online calculator to compare the premiums for your monthly payments along with the amount of cover you need from several companies. As with any other cover provider, you may need a health examination in order to sign up for the cover. Some companies may insure you with pre-existing medical conditions, but almost all companies will charge a higher premium if you are a smoker. With most providers, you are considered a non-smoker if you quit smoking more than 12 months ago; anything less and you will be considered an active smoker.

If you are unsure how to go about looking for a universal life insurance policy, hire an insurance broker. A broker will compare several universal policies at once, much in the same way that you would online. However, in addition to comparing premiums from direct insurance providers, they often receive discounts from private companies. So for example, you may receive cover for a monthly fee of £60 whereas they may be able to get you the same cover for £30, so it is defiantly worth looking into since a universal life insurance policy tends to be more expensive than term policies. The interest rate on the cash side of your universal will also vary depending on the insurance company, so make sure you inquire about this from your broker. Remember, their job is to get you the best universal cover, so you'll need to have an idea of exactly what you need up front. Don't be afraid to ask questions about the universal plans, even if you decide to research on your own.

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