What is universal life insurance?
Universal life insurance is a permanent life insurance product which comes with flexible premium options from the day you deposit your first monthly premium.
Universal life, or simply “UL”, serves a great midpoint product between term life and whole life. Instead of a coverage for a specific amount of time, or one with the same repeating payment amount, you’ll get permanent lifetime coverage with the flexible premium payment options.
No matter how your health changes over your lifetime, a universal life policy remains active for as long as your premiums are paid in full. A UL policy can help you build a lifelong legacy your loved ones can rely on.
Let’s take a deeper look at universal life insurance and explain in simple terms how this type of policy works. This way, you'll be empowered with key information to start building the foundation for your legacy.
How does universal life insurance work?
At Legal & General America, we offer what’s called guaranteed universal life insurance, which guarantees you will be protected to age 121, gives you flexibility with premium payments, and provides an option to decrease your death benefit if your needs change.
When you pass away your beneficiaries receive a tax-free cash sum, called the death benefit. This money can be used to cover anything, and often aids with paying funeral expenses, mortgages, estate tax bills, and medical bills.
What
makes universal insurance special is premium flexibility and affordability.
Having adjustable premiums means that you have the option to make higher premium payments when you have extra cash on hand or lower ones when money is tight (subject to certain minimums and maximums).
What is cash value?
A universal life policy has two main components, the face amount and the account value. The face amount is used to determine your life insurance death benefit. The account value is the basis of the cash value, an amount of money the policyholder can receive back if the policy is liquidated before death.
How much does universal life insurance cost?
Universal life policy varies, it is calculated based on factors such as your age, gender, lifestyle, and health status. A UL policy’s components are more straightforward than other permanent life insurance policies, such as whole life, and can be tracked with annual reports.
Typically, the cost of life insurance rates increases every year with age. A health status is determined when your policy is issued, and your cost can be significantly lower if you are in better health. This is why experts recommend you consider getting life insurance when you’re young and healthy, so you can lock in a lower rate for life.
Who should buy universal life insurance?
Anyone with expenses or dependents can benefit from the death benefit protection provided by life insurance. Universal life policies give the most flexibility for premium payment options.
You don’t have to be a certain age to purchase this type of policy. Let’s say you purchase a UL policy in your 20s or 30s and pay your premiums in advance. Your coverage would be set for life before you even consider having a family or buying a house!
Making it real - universal life example
David and Melissa Shaw’s life changed when they found out that they weren’t just going to be “Dave and Mel” anymore. They were going to have that sweet little one they had been hoping for! As new parents, they prepared a nursery and got all the baby gear ready for little Sophie’s arrival.
In the same year, Dave started a new business with excitement for the chance to stay at home for part of his day with his new baby girl. As Sophie grew, the business developed too. Soon, the Shaws came to realize that as parents of a child with special needs and owners of an expanding business it was time to consider how life insurance could protect them and those that depend on them. They were looking for a permanent policy with built-in flexibility, so they could shift with their business, and a predictable asset they could count on being there when they need it. This way, they could leave a legacy for Sophie in the event that they were not there to care for her. A universal life policy gave them both peace of mind and a gift that they can count on for a lifetime.
Advantages of Universal Life Insurance
When you purchase UL through LGA, you’ll get affordable lifetime protection for your family with flexibility to get you through life’s changes. Flexibility comes with options including a flexible premium, meaning you can choose to pay level premiums for your lifetime guaranteed coverage, or customize your payments with a short pay guarantee.
The short pay guarantee allows you to craft a customized premium payment for a specific number of years. For example, say you have an inheritance and want to use that to pay enough premiums to guarantee lifetime coverage, or you want a plan where you can complete the payments of your lifetime premiums before you retire. A short pay allows you to do this by consolidating the premium payments required for a lifetime guarantee over a limited period of time. Your premium payments would stop after the payment period has ended.
Some of the biggest advantages of purchasing a UL from LGA:
- The policy doesn’t expire. You’re covered for life.
- Premiums are flexible. You can choose to pay more up front and less in your retirement days, or in another way that suits you best.
- Your account value has a guaranteed minimum interest rate.
- It can be more affordable than whole life insurance.
- There are no restrictions on how your beneficiaries can spend your death benefit.
- Your policy is backed by a trustworthy insurance provider with a proven history of powerful financial ratings. LGA has more than 70 years of industry experience and is part of Legal & General Group Plc -- one of the world’s leading multinational financial services companies.
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The policy doesn't expire. You're covered for life.
UL can be more affordable than whole life insurance.
Premiums are flexible. Pay in a way that works for you.
Your policy is backed by a trustworthy insurance provider.
- Provides coverage for life
- Includes provisions for guaranteed cash values
- Includes provisions for guaranteed cash values
- Flexibility so you can choose a lower premium
- Guaranteed cash value
- Level premiums for life
- Short pay guarantee so you can consolidate payments over a limited period
- Ideal for adults with grown-up children and business owners
- Fixed premiums
- Fixed term lengths
- We pay approved claims within 1 business day
- 99.9% of claims were paid in 2020
- Our claims teams has 188 years of experience combined
- We make it easy to submit a claim
Get your universal life insurance policy today
Leaving your lifelong legacy is an attainable goal with a strong protection plan provided by a universal life policy. More than life insurance, at LGA we want our customers to live life to the fullest, knowing that their families are well-taken care of, no matter what happens.
Find an advisor near you
If you’re thinking of purchasing a UL policy, contact a licensed financial advisor to help you navigate your options and find the best fit for your budget and long-term objectives.
Beyond universal life insurance
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