Archive for the Canada life ULI Category

Advantages and Disadvantages of Universal Life Insurance

In order to understand the Advantages and Disadvantages of Universal Life Insurance , you need to understand what universal life is. Whenever we think about insurance, two kinds probably come to mind: term insurance and whole insurance. By understanding the advantages and disadvantages of  universal life insurance you may find that Universal Life Insurance is the perfect mix of term life and whole life policies.

Advantages and Disadvantages of Universal Life Insurance

The major advantage of UL is flexibility is that you can change the protection level of the policy  and you control the amount and frequency of payments.

  • A universal life insurance policy has the flexibility to adjust to your changing needs.
  • universal policy offers permanent protection, unlike a term policy.
  • you have the options of withdrawing or simply borrowing from your universal account or policy, a convenience that is similar to a whole life insurance policy.
  • universal policy offers accounts for cash value that are low risk. Plus, the cash accumulation is tax-deferred, which means you won’t have to pay taxes for the cash your policy accumulates. In addition, your policy’s cash value account can also earn interest with market rates.
  •  universal life insurance policy offers both face amount and premium flexibilities.

Keep in mind that as your life changes (i.e., marriage, birth of a child or job promotion), so will your life insurance needs. Take care to ensure universal life insurance is suitable for your long-term needs. You should weigh any associated costs before making a purchase. These policies offer disadvantages as well.

They come with fewer guarantees than Whole life Insurance  policies. While the policies offer flexibility when it comes to making payments, this flexibility can cause the policy to have funding issues. This can affect the death benefits and the cash value of the policy. The growth options for the policy are limited when compared to variable life policies. There are no investment options available. Adding features like No Lapse Guarantee will increase the premiums required for the policy. It is important to look at both sides of universal life insurance before investing in a policy.