Universal Life Insurance

Universal life insurance is the most flexible product.With a universal life policy, the insurance element can either be term or whole life, and the balance of the premium not required for insurance is deposited in a savings account or placed in an investment fund. You have the option of increasing or decreasing premiums, paying them on a regular or irregular basis, or even taking them out of the policy's cash surrender value.

Similarly, you can increase or decrease the face amount, although medical evidence of insurability may be required for an increase. Since this flexibility requires extra administration efforts on the part of the insurer, you may be required to pay policy maintenance fees, which are charged directly to your savings fund.

There are two major differences between universal life (UL) and whole life (WL) policies. One is that UL policies can pay both the face amount and the cash values to the beneficiaries upon the death of the insured, whereas a WL policy will only pay the face amount. The other is, with a UL policy you get to choose the actual investment vehicle the investment portion of your premiums go into, but with a WL policy you don't. Depending upon the life insurance company there may be plenty of investment options.

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