Term Life Insurance Combined With Saving Is The Definition Of A Universal Life Policy

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What is the definition of a universal life policy? About 20 years ago the life insurance industry was concerned more than usual the "buy term and invest the difference" advocates. As a result the actuaries went to work, not only to improve term life insurance policies, but also to come up with viable combinations of investment instruments and term life insurance. Together with variable life the universal life insurance policy was born.

The definition of a universal life policy is as follows. Universal life is a term life insurance policy with a saving element attached. It is even more flexible than a whole life insurance policy in some ways in that the death benefit, premium and savings element can be changed at any time to fit the desires and financial situation of the policy owner.

• The Death Benefit

  The death benefit of a universal life insurance policy is usually paid to the beneficiary free from income taxes. Because the proceeds can be paid directly to the named beneficiary the delay that is usually brought about by probate is eliminated.

• The Flexibility

  You can elect to change the amount of life insurance protection as your need for protection changes. Premium payments are flexible and can be adjusted according to your ability to pay.

• The Cash Values

  Continuing the definition of a universal life policy. Like whole life insurance cash values of universal life insurance accumulate tax free, and can be borrowed if you should have a temporary need for additional cash. You can use cash values of your universal life policy to fund a college education for a child, pay off the balance of a mortgage or make a down payment on a new home, or may be to start a business.

The definition of a universal life policy is all of the above and even more. You can add the waiver of premium and the accidental death benefit to the insurance portion of the policy.