The Importance of Universal Life Insurance

Ask someone in their 20s or 30s — chances are high that they’d rather save up for their dream vacation than invest in universal life insurance. Though it’s an important purchase, most people tend to prioritize this kind of investment the least. 

In case you’re still not familiar with it, this type of insurance is most recommended by financial advisors if you’re seeking long-term coverage and for better policy flexibility. 

Life Insurance Jargons

To fully understand the importance of universal life insurance, you must first familiarize yourself with the fundamentals of life insurance. Here are some of the jargons you need to know: 

Term. If you pass away within this period of time, your beneficiary can receive the lump sum of your policy. If you outlive your policy, you can get a refund of the premiums you’ve paid. 

Premium. This refers to the amount of money you pay to your insurance company to keep your coverage. This can be paid monthly, quarterly, or annually. 

Cash Value. This is the money you can accrue throughout your coverage; the money you can eventually withdraw from your policy. 

Death Benefit. Contrary to cash value, this is the “face amount” of your policy — or the amount your beneficiary can receive once you pass away. If your policy is worth $200,000, this is also the amount of your death benefit. 

Beneficiary. The person eligible to receive money from your policy. 

What A Universal Life Insurance Can Do For You

Compared to the most basic kind of life insurance — the term life insurance — a universal one helps you garner extra income through your coverage. This extra money comes from the interest of the premium that you can accrue over time. 

Depending on your situation, you can also choose to pay the minimum required amount of premium or more. The latter subsequently translates to a larger cash value that you can withdraw or a larger death benefit that your beneficiary can receive. 

This type of insurance policy is further divided into different categories:

Indexed. In this policy, your returns are attached to a certain stock index. It means that the cash value you can accrue can increase, depending on the movement of your index. 

Guaranteed. As its name implies, the interest rate you can get from this policy is fixed and won’t have the chance to increase. The upside is that you have a guaranteed cash value and death benefit. The amount of premium you pay in this policy is dependent on your age — the older you are, the higher it will be. 

Variable. Through this policy, you can manage mutual funds. And the performance of your policy is dependent on the performance of the funds that you are managing. 

The Beat Time to Buy 

For many financial planning experts, it’s most ideal to purchase this insurance policy if you’re still in your 20s or 30s. To help you maximize its benefits, you need to commence your investment around 10 to 15 years before you start cashing out or withdrawing your cash value — granted that you won’t pass away within this period.

If you are looking for universal life insurance with more flexible options, contact us today at True Blue Life Insurance. Ask for more info or get a quote so you can get great long-term coverage.

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