Universal life insurance is a much more flexible form of whole life insurance. If whole life insurance appeals to you, but you aren’t quite comfortable with certain aspects of it, universal life insurance may be ideal for you.
Take these tips into consideration when selecting a universal life insurance policy.
Determine your life insurance needs. Universal life insurance isn’t the best form of life insurance for everyone. Some insurance experts recommend that only people who feel they’ll need coverage until late in life (70s-80s) will fully benefit from universal life insurance. Study up on the policy’s benefits (such as the tax-deferred interest savings component) before determining if a universal life insurance policy is right for you.
Research the insurance company. Always do a bit of background work on an insurance company with which you’re considering doing business. First, contact your state’s department of insurance to make sure the company is licensed to sell universal life insurance in your state. Next, check out the financial rating of the company (you can do this by searching independent research company databases). Finally, visit the Better Business Bureau’s website to examine complaints filed against the company and the manners in which they were handled.
Understand riders. Universal life insurance can be adjusted with “riders” (additional coverage) to fit your and your family’s needs. Speak in depth with an insurance agent about the available riders and what riders would best suit your situation.
Find out how to increase and decrease coverage. As your life changes, so may your life insurance needs. With a universal life insurance policy you can increase or decrease your coverage depending on your changing insurance needs. Make sure your life insurance agent fully explains the steps to do so.
Keep the policy for 15 years or more. A universal life insurance policy is an investment, and it will take at least 15 years before you are eligible for a policy return.