Universal life
A whole life policy that combines term insurance and investment elements.
Universal life insurance is a type of insurance that combines lifelong protection with the ability to accumulate cash value over time. The policy provides a death benefit that is paid to beneficiaries upon the death of the insured. The policyowner is also able to build cash value through premium payments, which earns interest. The cash value can be used to pay premiums, taken as loans, or withdrawn.
One of the main advantages of universal life insurance is its flexibility. The policyowner is able to adjust the premium payments and death benefit as their circumstances change, allowing for a more personalized policy. Another advantage is that the policy’s cash value earns interest on a tax-deferred basis, allowing for potential growth over time.
However, universal life insurance also comes with some risks. If the cash value is not sufficient to cover the premiums due, the policy may lapse and the death benefit may be forfeited. Additionally, the interest rate credited to the cash value is not guaranteed and may vary over time. It is important for policyowners to review their policy regularly and make adjustments as necessary to ensure that it continues to meet their needs.
Overall, universal life insurance can be a useful tool for those looking for lifelong protection and cash accumulation, but it is important to carefully consider the risks and benefits before purchasing a policy.
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