Universal Life Insurance is a type of permanent insurance that covers you with cash-value material for your entire lifetime. Here, instead of just choosing a fixed term and putting 100 percent of your premium towards the policy, part of your premium will actually go to the cash account in the policy. This cash account earns interest and accrues tax deferred.
The Benefits of Universal LifeInsurance life insurance offers more flexibility than term life. Because it has a cash component, you can actually temporarily stop paying premiums as long as the cash price can cover insurance costs. In addition, you may be able to increase or decrease the benefits of death over time. Also, you can usually take a tax-free loan against the cash value of the policy.
The disadvantage of Universal Life is that, because of permanent coverage, public life is more expensive than term. In the form of cash value creation, the portion of the added value that goes into the account, in the sense that the rates you earn are not higher than what you would get from investing in stocks or mutual funds. That is why many financial professionals buy the term and recommend investing the difference. Wherever you have the flexibility to invest the difference anywhere, you can still purchase the death benefit.