The Wallace Insurance Agency

Universal Life Insurance Coverage 

Understanding the Benefits and Uses of Universal Life Insurance Coverage.

Universal life insurance coverage is a type of life insurance that provides a combination of a death benefit and a savings component. It is designed to offer flexibility and control over the policy by allowing policyholders to adjust the amount of coverage and premiums over time. Unlike term life insurance, which only provides coverage for a specific period, universal life insurance offers lifelong protection as long as the premiums are paid. One of the unique features of universal life insurance is the cash value component. A portion of the premiums paid is allocated to a cash value account, which earns interest over time. The policyholder can choose to use this accumulated cash value to pay premiums, increase the death benefit, or even borrow against it. This flexibility is a key advantage of universal life insurance, as it allows individuals to adapt their coverage to their changing needs and financial situations. It is important to note that the interest earned on the cash value is generally tax-deferred, meaning policyholders do not have to pay tax on the gains until they withdraw the money. However, not paying premiums or withdrawing too much from the cash value can jeopardize the policy and potential coverage. Universal life insurance can be a smart choice for those seeking lifelong coverage with the added benefit of accumulating cash value, as long as it is properly managed and the premiums are paid according to the agreed terms.

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