Top Universal Life Insurance Pros and Cons
Posted by Lenny Robbins on Tue, Feb 07, 2012 @ 03:34 AM
People 50 and older often need to re-consider their life insurance needs. Sometimes, as people approach 50, their Term Life Insurance is ready to expire. Other people have Whole Life policies and wonder if they can convert to something which would offer more flexibility. Whatever your insurance needs, you may want to consider Universal Life Insurance. Here are the Universal Life Insurance Pros and Cons:
Pros: Flexibility Gives You Choices
- Different types of policies: equity-indexed, guaranteed policies, or variable policies.
- Policy Holder has options in how premiums are structured.
- Guarantee can be of different lengths of time, until death or any length of time you choose.
- Structure of policy can be adjusted to help you meet your financial objectives.
- If you have current insurance with cash value, you may be able to convert it to Universal Life by using a 1035 exchange.
Pros: Riders Give You the Ability to Personalize
Riders can be added to personalize your insurance needs; however, Universal Life Insurance pros and cons are complicated. An independent life insurance agent is your best source of help to see how riders might help the needs of you and your family. Here are some of the possible policy riders:
- Accelerated Death Benefit Rider: allows a terminally ill person to get an advance payment for needed health expenses. This rider is usually free with all policies in the states that allow the rider.
- Child or Spouse Insurance Rider: allows you to add insurance for your child or spouse at an additional cost.
- Long Term Care Rider: can be an alternative to purchasing Long Term Care insurance because it allows death benefit to be used for long term care if necessary.
- Waiver of Premium Rider: if you are unable to pay premium because of a disability, this rider can allow your premium to be waived.
- Cost of Living Adjustment Rider: allows for a COLA adjustment in benefit.
Cons: Price
Universal Life Insurance is more expensive than Term. However, an independent insurance agent can help find a policy can be made affordable by adjusting premium payment schedules, and whether or not you choose a guaranteed plan.
The Bottom Line
Universal Life Insurance pros and cons are complicated. While flexibility is helpful, it also makes choosing a policy confusing. An independent insurance agent can cut through the confusion by analyzing your needs and helping you choose the policy which is most beneficial to you and your family.
Photo Credit: Dan4th Nicholas