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Universal life insurance has some unique benefits that many appreciate. To understand universal life it is helpful to compare it to whole life insurance and term insurance. The main differences are found in the premiums, annual dividends, interest payments, flexibility in death benefits, and if the policy has any investment/savings value that can be borrowed against. Your agent at Mid Atlantic Insurance Financial, serving Laurel, MD, and the nearby communities, will help you understand the details; however, here is the overview.
Premiums
Premiums for whole life are a certain amount that does not change. If a person gets whole life insurance when young, the premiums are usually very modest. They stay the same over the whole life of the person. This is why whole life is called “permanent” insurance.
Universal life allows flexible premium payments as long as the minimum is paid. The payments can be adjusted up or down depending on the particular financial circumstances of the insured.
Term life has a set payment that remains the same for each month of the term.
Dividends and Earned Interest
Whole life pays annual dividends that can either be accumulated to build up value in the policy or paid out each year. Universal life has a variable interest rate that helps the policy build value. Term life does not have annual dividends or earn any interest.
Borrowing
Both whole life and universal life build value over time that can be borrowed against.
Death Benefits
Universal life has the option of a level death benefit, which stays the same over a person’s life or the ability to have an increased amount or decreased amount of death benefit.
Summary
There are many more details to consider when thinking about universal life. The main advantages are the flexibility in premium payments and death benefits. Additionally, universal life is permanent insurance meant to be kept for the entire life, just like whole life, as opposed to term life insurance, which is only good for a certain period.
Call us to get a quote for life insurance from your agent at Mid Atlantic Insurance Financial in Laurel, MD or if you prefer you can use the convenient online form.