Originally Posted On: https://www.iquanti.com/
If you have a family that depends on your income, it may be best to purchase a life insurance policy. With one of these policies, the people you name as beneficiaries will be given a lump sum payment in the event of your death, which they can use to pay for funeral expenses, pay bills on time, or go to college.
Even though every life insurance policy is beneficial, they can differ in the types and amount of coverage they provide. Along with whole and term life insurance, you could also sign up for universal life insurance. Below are several reasons why universal life insurance may be preferable for you.
What Is Universal Life Insurance?
You may be familiar with term and whole life policies, but what is universal life insurance? Universal life insurance is a kind of permanent life insurance that only ends in the event of your death. Every universal policy comes with a cash value aspect like a savings account. This account will earn interest over time, which means that the amount of money you have access to will increase.
How Does Universal Life Insurance Work?
Once the cash value account reaches a specific amount, you’ll be able to borrow money from the account or use it to reduce the amount of premiums you owe. You could also use these funds to increase the death benefit your family receives.
Each month, you’ll pay a premium, a portion of which is sent to your cash value account. The remainder of your payment will be used as part of the death benefit that’s eventually paid out.
When you die, your beneficiaries are given a payment based on the amount of money in your cash value account and the policy you have. These funds aren’t taxable and can be used to pay for anything, including car payments, mortgage, college tuition, and medical bills.
Why Universal Life Insurance Is Right for You
Universal life insurance offers many benefits you may not find with other policy types. For instance, taxes on your cash value account growth are deferred. As mentioned, beneficiaries don’t need to pay income taxes after receiving the death benefit. Additional benefits include everything from more flexibility to the length of coverage.
Affordability
These policies are usually more affordable when compared to whole life policies, which means you’ll save more money over time.
Flexibility
If you want to lower your monthly premiums, you can do so. It’s also possible to pull cash from this policy or borrow against it, depending on your needs.
Savings
The cash value account you gain access to makes saving money and increasing your funds easier over an extended period.
Length of Coverage
These policies provide permanent coverage that remains in place until you die. In comparison, term life insurance policies last anywhere from 10-30 years.
Bottom Line
No one wants to think about their own death, but planning for it is one of the most responsible things you can do. A universal life insurance policy provides financial security for your loved ones in the event of your death and offers a cash value component that allows you to save money in the long run. The coverage is much longer than term life insurance policies and can be more affordable.
If you’re looking for a life insurance policy to provide peace of mind for you and your family, consider purchasing universal life insurance.
