Universal Life is a type of insurance which combines term insurance with an investment program. It is one of the most popular cash value policies. In some states, universal life is called flexible premium adjustable life insurance. Regardless of which of these names is used, the concept of universal life involves establishing a fund into which regular, or sometimes intermittent, premiums or deposits are paid. Monthly or annually, the insurance company withdraws an amount sufficient to pay the premium for the annual renewal term coverage for the amount selected for the current policy year. Want to learn more?
Universal life is referred to as a nontraditional form of life insurance as opposed to the more traditional forms of insurance, such as whole life. Universal life pays a return to the policyholder that is based on current market interest rates. Often, a minimum rate of return is generally guaranteed by the insurance company and specified in the policy. Universal life insurance generally pays a higher rate of return than is otherwise available through the purchase of regular life insurance policies.
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