Advantages / Disadvantages of Universal Life Insurance

One kind of life insurance that’s popular today is universal life insurance. Universal life insurance may not be the right kind of life insurance for you, however, so read on to learn more about its advantages and disadvantages.

Universal life insurance is a form of permanent life insurance. When you buy universal life insurance, you are paying a portion of your monthly premium to be put into an account that then accrues interest. It’s like opening up a savings account, because you can, contingent upon the terms of your specific universal life insurance policy, access that money if you need it. The drawback to accessing that money is that it will result in a lower payout benefit to the beneficiary (the friend or family member who is listed on your universal life insurance policy as the recipient).

Another problem that many people have with a universal life insurance policy is that very often, the commission that insurance brokers charge for it is substantial, sometimes equaling a year’s worth of premiums. This means that insurance agents and brokers want to sell people universal life insurance when another, cheaper kind of insurance would be the right policy for them to have.

Before you purchase universal life insurance, be sure to discuss its advantages and disadvantages with a financial advisor. Universal life insurance is definitely not right for everyone, so make sure to do your research first.

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