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Universal life insurance offers flexible premiums and cash value growth
Universal life insurance is a form of permanent coverage that is designed to last for life, often until around age 100. It is structured to allow policyholders to adjust key features over time, including premium amounts and, with certain rules, the death benefit.
According to Yahoo Finance, part of each premium goes toward the cost of insuring the policyholder, while the remainder is directed to a cash value account. The cash value grows based on interest rates, and the growth rate depends on how the insurer credits interest under the specific policy type.
The policy's cash value can be accessed while the insured is alive, including options such as withdrawals or policy loans. Once sufficient cash value has accumulated, it can also be used to lower premiums or, in some cases, skip a payment.
Yahoo Finance also notes that while death benefit changes are possible, increasing the death benefit usually requires a medical exam. It adds that lowering premiums too much can underfund the policy, potentially leading to a reduced death benefit or allowing the policy to lapse.