How Is Universal Life Insurance Different From General Life Insurance

Life Insurance

Universal Life Insurance is a type of permanent life insurance policy which has the elements of term life insurance protection and also the savings element. Universal Life Insurance offers the benefit of flexibility. By flexible, it means that you can alter the terms and benefits of the life insurance policy, by altering the savings component, death benefits, and the premiums.  One huge benefit that the Universal life insurance offers to its policyholders is that the policyholders can use the savings interest accumulated on their balance, to pay off the insurance premiums.


What Happens In A Universal Life Insurance

Universal Life Insurance was engineered to provide more flexibility to the insurance policyholders, than the whole life insurance. It comes under the umbrella of Permanent life insurance. The premium which you pay in this policy is broken down into two parts, they are – the cost of insurance and the amount taken as a savings component. The savings component is also known as the cash value. You are required to at least pay the cost of insurance, and also over and above it. Over time, your premiums can also be shifted in case the savings portion is earning a comparatively lower rate of interest. You may also shift the premium for any other need. So, as long as the minimum amount of premium, that is the cost of insurance is paid, be it externally or through the interest on savings, your policy is in force.


The Difference Between Whole Life and Universal Life Insurance

– The premium

In Whole life, you have a fixed amount of premium, unless otherwise altered, throughout the life of your policy, while in Universal life insurance policy, you have flexible premium, in which only the minimum amount of premiums are to be paid as an obligation.


-The cash value benefit

In Universal Insurance policy, as long as there is contributed balance or cash value in your insurance policy, you can skip the insurance premium payment on the due date as your cash value balance can be utilized to the extent of your premium amount