Universal Life Insurance

Companies market life insurance as an essential tool to ensuring that death does not leave behind a frantic search for money that will quickly become necessary in order to pay for funeral expenses, old debts, current bills, etc. “Financial peace of mind” can be identified as the unofficial slogan for life insurance. For many, however, buying life insurance can be a confusing, intimidating process. While various insurance companies offering a variety of policy options may at first be overwhelming, the good news is the variety of options available typically mean there exists a policy best suited for practically everyone—the trick is understanding what each policy has to offer.
Term life insurance is simple and affordable. It is typically referred to as the simplest life insurance policy because term life is quite straightforward. Coverage is provided for a specific period, e.g. 10, 20, 30 years, and when that “term” ends so does coverage. It is also the most affordable type of life insurance making it an appealing option to young people looking into life insurance …show more content…
This policy offers lifelong coverage with flexibility down the road. In contrast to term life, universal life allows the policyholder to control both the amount and frequency of payments. Universal life is truly set apart from term life by the chance to build cash value that grows tax-deferred. One portion of each premium goes towards the death benefit while another portion goes towards building cash value. Cash value is a feature that allows a portion of the premium payment to collect interest that the policyholder can later use. Yet more reasons universal life is such a flexible policy are the options to use the cash value to pay for premiums and to borrow against or even withdraw from the accrued cash value. However, it is important to note that a policy’s death benefit can be reduced by borrowing against or withdrawing from the policy’s cash