Universal life insurance is a versatile type of permanent coverage that includes both a death benefit and a cash value component that grows over time. While it is not for everyone, it can be a valuable financial tool in the proper circumstances. Wondering who should consider universal life insurance? Keep reading to learn more.
- People Who Want Lifelong Coverage: Unlike term life insurance, which expires after a certain number of years, universal life insurance lasts the rest of your life—as long as you make consistent payments. If your primary purpose is to provide a guaranteed death benefit to your family, universal life insurance provides peace of mind.
- People Seeking Flexibility: Universal life insurance plans have flexible premiums and death payouts. That means you can increase or decrease your coverage or even miss payments if the policy’s cash value allows it. This flexibility appeals to people whose financial circumstances may alter over time.
- People With Maxed Out Tax-Advantaged Assets: A universal life policy’s cash value increases tax-deferred, and policy loans are frequently tax-free. For high-income individuals who have maxed out other tax-advantaged assets such as 401(k)s and IRAs, a universal life policy can serve as an additional source of long-term gain.
- People Interested in Estate Planning: Universal life insurance is often utilized in estate planning to assist heirs in paying estate taxes, assure company succession, or support trusts.
- People Who Want to Create a Legacy: Some people consider universal life insurance when they want to provide a financial legacy for their children or grandkids. With careful planning, it can be an effective way to transfer money to younger generations.