Advantages and Disadvantages of Universal Life Insurance – Considering All Points

Every type of life insurance policy has both its advantages and its disadvantages.  If there was one common policy that was better for everyone, it would be the only option to choose from.  Universal life insurance is a kind of whole life insurance because it can be maintained for the rest of a policy holder's life.  However, it also shares some qualities with term life insurance.  All of its features add up to be either an advantage or a drawback.  Both sides will be explored here.

There are several notable advantages of universal life insurance.  Since it can be held for a lifetime, there is no need to renew coverage or risk the possibility that your term will expire and make your payments so far null and void.  Similar to term life insurance, however, universal life insurance allows the policy holder to change their premiums and adjust the amount they are covered.  This kind of flexibility is a great benefit of universal life insurance.  Also, there is the advantage of a cash value accumulation.  As with other kinds of whole life insurance, this option turns your premium into an account with money that is available for withdrawal even before you pass away.  These are the great benefits of universal life insurance.

The disadvantages must be addressed as well.  The most profound of these is that whole life insurance options like universal life insurance are more expensive.  Even though you have flexibility in your amounts, you will get more for your money in terms of death benefits with term life insurance.  Also, while the cash value feature is present, the amount accumulating will vary based on the effectiveness of the insurance company's investment decisions.  While you will see a minimum return no matter how badly the investments go, you may see your cash value drop if you fail to make the high premium payments.  There is also the possibility that you could end up paying a high commission to a broker, which could cancel out the money you make in your cash value returns.

Both the advantages and disadvantages of universal life insurance should be considered if you think it might be right for you.  You need to consider all your options and do your research rather than simply trusting the advice of a broker, who could simply be looking to make a commission off your purchase.  However, because of the advantages, universal life insurance could be perfect for you.

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