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What Is Universal Life Insurance?

Universal life insurance a kind of life insurance policy that has the added benefit of providing the policyholder a chance to build up cash value. In short, a person who has a universal life insurance policy can have access to the money that he puts in. He can make additional deposits on top of the regular premiums. He can withdraw the money, and he can opt to leave the money untouched so that it will grow over time. These features are what make universal life insurance quite different from the traditional term life insurance policy.

More than having access to the funds, a universal life insurance policyholder also has the option to continue paying for his policy for as long as he wants, or is able to. The benefit of this is that, the more money that is placed in the fund, the more potential it has to earn. Again, this is different from term life insurance, which does not allow the policyholder to pay premiums after a specified amount of time.

There are several kinds of universal life insurance policies available in the market today. One is the indexed life insurance, which is distinguished by the fact that interest is paid on the cash value of the policy. This interest is dependent on a particular financial index, and if the index goes below zero, protection is given to the policyholder. Another kind of universal life insurance is the survivor universal insurance policy. This kind of policy is taken out by two people, and the compensation is paid out only when both people have died. Variable universal life insurance is perhaps the most popular as this covers all life insurance benefits and also allows the company to make investments on behalf of the policyholder.

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