Pros and Cons of Universal Life Insurance

Universal life insurance is a type of permanent life insurance which you can use to help your beneficiaries when you are no more. But is it the right insurance policy for you? To answer that question, consider the following pros and cons of universal life insurance.

Pros

Flexibility: Universal life insurance offers you immense flexibility. You can decide to pay a low premium when you are almost penniless and later pay a higher premium when you are financially buoyant.

Interest options: You have several investment options to choose from if you are a policyholder of universal life insurance. You can opt for a general interest account, a guaranteed 1-year-term deposit, or an equity index strategy.

Access to cash value: Universal life insurance allows you to borrow or withdraw funds from your cash value.

Permanent coverage: The long-term benefit of universal life insurance is that you get coverage for your entire life if you pay your premium when due and invest your cash value wisely.

Tax deferment: You cash value will be taxed only when you want to withdraw it.

Cons

Expensive: The amount of premium you will pay is much more expensive than that of life term insurance and whole life insurance.

Fixed interest rate: The amount of interest rate you will get on your cash value is fixed even if you make more than the fixed amount.

Investment knowledge: If you don’t have experience about how to invest your cash value, universal life insurance can be somewhat frustrating. This is because you need to know how to monitor your cash values