In our previous articles, we told you everything you need to know about two different life insurance plan types: whole life insurance, and term life insurance. While these are the most common types of life insurance chosen by families and individuals, there is one more category to understand before making your decision.
Thank you for reading this post, don't forget to subscribe!This article will delve into universal life insurance – a type of permanent life insurance coverage, with specifications that distinguish it from other permanent plans (like whole life insurance). Read on to inform your decision as to whether or not universal life insurance is the best investment for you and your family.
What differentiates universal life insurance?
At first glance, whole life insurance and universal life insurance seem similar. Many might not even understand that there is a difference, since they fall under the same umbrella of permanent life insurance.
These two plan types do hold some similarities other than their lifelong presence: both have a death benefit, and both have an added cash value component. The difference between the two lies in the nature of the cash value account. While whole life entails fixed monthly premiums, split to accommodate the death benefit and the cash value account, universal life offers greater flexibility in what you pay. If you find yourself in a rough spot financially one month, you can pay a lower amount for the premium by not adding as much to the cash value account. This flexibility feature works both ways – if you have more money to spare, you can add extra to your cash value account.
Eligibility for universal life insurance
In order to prove your eligibility for universal life insurance plans, you typically will be required to complete a health examination through your primary care provider. These exams serve to collect information about you as an individual and will be held on record. Most exams include:
- A physical
- Questions about lifestyle and health habits
- Prescription history
- Access to your medical history records, DMV records, etc.
It’s important to be straightforward and honest when taking a medical exam, even if you feel that something about your lifestyle may keep you from being approved for an insurance plan. Failure to do so can be held against you and prevent your loved ones from maintaining access to your death benefit.
What can I do with my cash value account?
The cash value account acts as an extra layer of financial protection in case life throws challenges your way. You can use the account to pay monthly premiums or make withdrawals for other uses. You can also cash out early on this account, but you will usually be required to pay income taxes on what you receive.
Is universal life insurance right for me and my family?
Being a permanent life insurance option, universal life is in the same ballpark as whole life when it comes to premium costs. However, universal life tends to be a slightly more affordable option than whole life. As always, preexisting risk factors like age, lifestyle, and occupational risk may affect premiums. If you want a permanent plan as opposed to a term-based plan, and you value flexibility, universal life insurance may be the right choice for you.
Armed with the most essential information about universal life insurance, you can now go forward to decide which life insurance option provides the most benefits for your price range and life situation.
Have other inquiries about the specifics of universal life insurance? Ready to get started on establishing a plan for you and your family at an affordable price? Contact PA Auto Insurance Outlet today – we’re Pennsylvania’s premier provider for home, auto, and life insurance plans, as well as auto tags and notary services. Visit our website to receive a quote today.