Universal life insurance may be worth it for buyers who want a death benefit and the potential to accumulate cash value, with the additional benefit of flexible premium payments and a flexible death benefit.
Universal life insurance can last a lifetime or until you reach the maturity date specified in the policy if you make the required premium payments. Many indexed universal life policies mature when the insured reaches age 121.
Universal life insurance death benefits are usually not taxable. The cash value component of a universal life policy grows tax-deferred. It is not taxable if withdrawn or borrowed, as long as it’s money that came from your premium payments.
You can borrow money (or take out a policy loan) from the cash value of a universal life insurance policy. Before you do, request an in-force policy illustration to see how the life insurance policy loan will impact the policy.
The two main differences between universal life and term life insurance are the policy durations and the cash value component. Universal life insurance is a type of permanent life insurance intended to last a lifetime. Term life insurance has a specified end date, after which you can renew the policy, but at higher rates each year. Universal life insurance offers a cash value component; term life insurance does not.
Group universal life insurance is a universal life insurance policy offered to a group of individuals, most commonly by an employer to employees. Depending on the employee, the group life insurance rates offered may be lower than what the employee could get in an individual policy.
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Deputy Editor, InsuranceAshlee is an insurance editor, journalist and business professional with an MBA and more than 17 years of hands-on experience in both business and personal finance. She is passionate about empowering others to protect life's most important assets. When Ashlee isn't spreading insurance knowledge or solving television murder mysteries, she enjoys spending time with her family (including the furry and feathery ones) on their farm in Kentucky.
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