Often people make the decision to get life insurance for the financial protection it can offer through death benefits. Yet when getting quotes for coverage, they come across terminology like term life and universal life. With a closer look at what universal life is, you may make the decision to move forward with getting universal life insurance quotes.
Different Than Term Life
Before you make your decision to move forward with getting universal life insurance quotes, however, you do want to take a moment to compare this coverage against a term life policy to see just how it differs. Term life is a policy that expires within so many years. When buying this type of policy, you select a term length, such as ten or twenty years. When that term ends, the coverage simply goes away. Universal coverage is different because it is designed to be in place because it offers on-going coverage for the rest of your life. When you are in your younger years and your family is dependent on your income to support their needs and lifestyle, death benefits are necessary. As you age and perhaps after retirement when income is not a factor, the death benefits may be used to make the life of a surviving spouse more comfortable or to provide inheritance to beneficiaries.
Another key difference between these two policies is that universal life features accumulating value. Term life is a policy that you pay for often on a monthly basis, and your payment essentially pays for death benefits. With universal, however, you have the option to pay a monthly premium over the base premium charge for death benefits. By doing so, your policy accumulates value over time. The value builds tax-deferred, and it does grow with interest as well. Over time, the amount accumulated can be significant.
Because the universal life insurance policy does provide the ability to build in value over time, it is considered to be an investment. Its value can be calculated as an asset in your net worth calculation. This value is available to you at any time in your lifetime, and many people use these funds when planning for their financial future. You can choose to either cash out the policy entirely, taking a lump sum of cash in the process, or you can borrow against the policy with a low interest rate and without the hassle of a loan approval process. The funds can be used to pay for kids’ college education, to buy real estate investments, to save for and fund retirement, to consolidate debts, to buy an annuity for income, and more. Some people purchase this policy with clear plans for how they will use this cash value over time, while others simply enjoy the peace of mind in knowing it is there if needed.
Before you made the decision to start shopping around for coverage, you may not have given universal coverage much thought. However, you can see that this type of coverage does have significant benefits over term life. Take time to consider how you might use the unique combination of death benefits combined with accumulating cash value in your insurance policy, and then get a few universal life insurance quotes to see if this is a sound investment that you want to make for your future and the future of your beneficiaries.