Many people opt for life insurance coverage with a permanent life insurance policy as opposed to one that will expire in 10, 20, or 30 years. There are several choices in permanent life insurance, but one that provides the policyholder several options and a great deal of flexibility is universal life insurance. If you're searching for a life insurance policy that won't expire, here is some information about your universal life choices, the coverage benefits, and a few potential downsides.
Your Universal Life Insurance Policy Choices
Buying life insurance is a confusing proposition for many because there are just too many choices. Even if you decide that you want a universal life insurance policy, there are several types to choose from. For your life insurance comparison purposes, there is a standard universal life policy, a variable universal life policy, and an indexed universal life policy.
A standard universal life (UL) policy has two components, the death benefit portion that is similar to term insurance and a
component that accumulates at a minimum rate, with the potential for higher returns based on the insurance company's portfolio performance. A variable universal life (VUL) policy, also has a standard death benefit, but the cash value component can go up or down based on the policyholder's investment choices. Finally, indexed universal life (IUL) policies are gaining in popularity according to
recent LIMRA numbers
. These policies also have the standard death benefit, but the cash value is both tied to a major investment index and has a guaranteed minimum rate of return.