Universal Life Insurance

Universal Life Insurance is permanent insurance that is flexible in nature. You can change your premium payments (higher or lower) to increase or decrease the death benefit. Like a whole life policy, Universal insurance builds up a cash value. The cash value is money you can access in a number of different ways.

You can take a loan against the cash value that does not have to be repaid. The interest rates are usually very low and repayment comes from the death benefit. You can take a withdrawal of the cash value which does not have to be repaid.

You can use the cash value to pay the premiums to keep the policy in force. If you do this, it depletes the cash value. There is the risk if you do this often that you will run out of a cash value. At that point, unless you increase your premiums, you policy is in threat of lapsing.

Universal insurance is more expensive than term insurance because it is there as long as you live. It is a good way to pay final expenses, debts and estate taxes.