Universal life insurance is a very popular and practical insurance policy that many people would like to have as it offers the functionality that allows for one’s investment in the policy to actually gain value as an investment in conjunction with a permanent life insurance component. With this kind of life insurance, the policyholder is relieved of the need to have both an investment account and a separate life insurance policy.
When a universal life insurance account is opened, the policyholder must deposit a dollar amount that covers one month’s premium. If the policyholder pays more than the premium amount, then it adds to the investment balance. The policyholder is free to make additional payments as they see fit, but it is required that the account always have enough to pay out the monthly premium to the insurance company. Should a policyholder miss a payment, then the premium is deducted from the investment fund balance.
Universal life insurance is attractive due to its flexibility. The policyholder decides the amount for the insurance coverage and can increase or lower the amount when they please as long as they first notify the insurance company. Policies vary so ask an insurance professional for guidance.
Some universal life policies promise a minimum return based upon one or another investment indexes. Other policies give the policyholder the option to choose among several investment strategies including stocks and bonds.
As long as the policyholder keeps up on his or her premium payments, the insurance remains in effect. The policyholder often is given the option to take out a loan against his or her investment balance in the policy. The policyholder is also offered an array of choices regarding how the policy will compensate beneficiaries in the event of his or her passing.