Universal Life Insurance Pros and Cons
There are two broad categories of life insurance that serve the permanent marketplace. They are known as whole life and universal life insurance policies.
Today, universal life insurance for seniors with guaranteed premiums and face amounts comprise the majority of permanent coverage. These policies are consumer friendly because they make it easy to understand and compare cost from one carrier to another.
Most major insurance companies offer universal life insurance coverage. Although some policies may generate nominal amounts of cash value, their primary benefit is the guaranteed nature of the premium and face amount, also known as the death benefit.
Underwriting categories for permanent coverage can be more advantageous for the insured as well, with some insurance companies offering special rates based on age and particular health issues.
- A universal life insurance policy will last a lifetime (as long as you pay the premiums)
- Can be structured so that your premium and face amount remain the same for the life of the policy
- Some companies offer people with certain health issues a better underwriting rating through different programs only available with universal life insurance.
- Can be structured to accumulate no cash value to keep the premiums lower.
- Can assist with estate taxes especially with a survivorship policy.
- More expensive than term life, but will last your lifetime. (At age 70 and older you may find the cost is comparable or even less expensive than a 20 year term policy- and may be even less as described above with a special program).
- May not be suitable for your needs (young couples with families may be better off buying term insurance where they can get much more term coverage while their children are growing and their estate is growing)
The best option is for you to discuss your needs and goals with your independent life insurance agent to make sure the life insurance you choose offers you the protection you need.