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Universal life insurance is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums and fulfill any other requirements of their policy to maintain coverage. Like many permanent life policies, universal life insurance combines a savings component (called "cash value") with lifelong protection. When you pass away, the policy's death benefit is paid out to your beneficiaries.


Beyond lifelong protection, there are a few additional features of universal life insurance:

  • You can withdraw money or borrow against the policy's cash value   

  • Your cash value earns interest.

  • You have flexibility with premiums.

  • You can adjust the death benefit.

Since a universal life insurance policy’s premiums are split between the cost of coverage and the cash value, you can choose how much you pay so long as it falls between the minimum and maximum premium amounts. Many people choose to pay the maximum premium possible for the first several years of coverage in order to build a large cash value, then use the cash value to pay premiums later on. 

A universal life insurance policy’s cash value can be used as:

  • Surrender Value - If you decide that you no longer want the policy, you can give it back to the insurer (“surrender” it), and the insurer would give you the cash value in return.

  • Loan Collateral - You can borrow money from the insurer and use the cash value as collateral, so that’s the maximum amount you can borrow. These policy loans are subject to interest rates which are set by the insurer.

  • Premium Payments - You can use the cash value to pay a portion or the entirety of a premium payment. Just keep in mind that policies will lapse if the cash value drops to zero, so you have to keep close track of the amount.

To make sure you get the coverage you want and need - to protect your family, your home, and your future - you need to be able to make choices. A universal life insurance policy allows you to choose and keep the coverage you want, for as long as you want and need it. Ready to get started? Get a free, instant life insurance quote using the tool at right. Or read on to learn why UL Insurance may be just what you need.

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