How does universal life insurance work?

Modern guaranteed universal life insurance is very affordable and can accumulate cash values like whole life, or have no cash value similar to term insurance.

Universal life insurance companies offer a multitude of different plan designs which can make understanding the policy confusing at times.

So, it is also important to understand two different designs before getting universal life insurance quotes.

How does universal life insurance work?

We make it easier to see your policy in action using our universal life insurance calculator to structure a plan that either:

• Builds cash values like whole life (but is much cheaper)
• Does not build any cash values and functions more like term insurance

Higher Premiums with Cash Value Accumulation

Guaranteed universal life insurance policies can be designed to accumulate excess cash values inside the policy.For people with extra money, over-funding the cash account gives people flexibility and freedom in the future.

Lower Premiums with No Cash Values

Policyholders who are not interested in accumulating money or who are apprehensive of fluctuating cash values have a another option.

This is a “hybrid design” of guaranteed universal life insurance which combines elements of both term life coverage and universal life.

These lifetime plans do not accumulate much cash value, but the premiums have a no lapse guarantee which can be selected for periods of time, or to a specific age.

As you can see, the premiums can be scaled to coordinate with your desired budget and the death benefit required for your family. You can design the policy to accumulate a lot of cash value or just maintain coverage for your lifetime.

As long as you continue to pay the no-lapse guarantee premium your coverage will remain in force.

After all, you really do not want your coverage to end just when your family may need the life insurance proceeds. Essentially, the insurance policy offers a good return on investment for your family because
benefits last a lifetime at a reasonable cost.