Have Your Life Insurance Needs Changed? Universal Life Insurance May be Right for You.
For some people, flexibility is the key to financial security. If you share this belief, you probably also feel that as your needs change your life insurance coverage should change.
Universal life insurance offers a combination of flexible premiums, access to cash value, and the possibility of flexible, lifelong coverage. If an increased level of control over premiums and benefit amounts is important to you, universal life insurance may be the right choice for you.
How Can Flexible Premiums Help With Unexpected Financial Changes?
As with every life insurance policy, the universal life policyholder pays premiums. From each premium payment, the insurer collects a stated percentage to cover expenses and the cost of insurance. The remaining amount is then applied to the policy's account value, which grows tax-deferred at a competitive rate of interest.
This is where the possibility of a flexible premium arises. You can pay more into the policy than what is required. Then, after the premium expense charge is deducted, the remainder will go into the account value to earn interest. Conversely, if you need to skip a payment or two, your policy won’t lapse if there is sufficient account value in the policy to cover expenses; however, this is subject to policy conditions and minimums. This flexibility gives you the ability to respond to opportunities or disruptions in your financial situation without having to restructure or repurchase your life insurance policy.
Can the Flexible Death Benefit Change According to My Needs?
Another advantage of universal life is the ability to increase or decrease the amount of coverage within certain guidelines. This occurs in two ways:
- Increasing Your Life Insurance Coverage.
Overtime, you may find that your permanent life insurance needs have changed, for example you purchased a larger home or had another child . Universal life insurance allows you to increase your coverage without purchasing a new policy. Typically, additional premium would be necessary to keep the policy in force to continue lifetime coverage. Keep in mind that increases must be applied for and are subject to underwriting.
- Decreasing Your Life Insurance Coverage.
If your financial responsibilities change , Universal Life can allow you to decrease your coverage without purchasing a new policy. The amount of the decrease is up to you, as long as it’s within certain policy guidelines.
The Flexibility of Universal Life Insurance
Universal life offers the possibility of a lifetime benefit and a guaranteed interest rate on the accumulated cash value, with the flexibility of premiums and death benefits.
For more information about whether universal life is right for you, discuss your needs with a State Farm® agent, or check out other options, such as Term Life Insurance, Return of Premium Term Life Insurance, or Whole Life Insurance.