There are many different types of life insurance plans available. Most people are familiar with term life insurance that pays the policy amount in the event of the insured’s death. Term insurance policies often have a premium guaranteed not to increase for a fixed number of years, for example 10 or 20 years. Whole life policies are designed as a permanent plan that a person could own for their lifetime. These policies build cash value in addition to the death benefit. The cash value can be borrowed against, and in some cases withdrawn.

 

A disadvantage of these two types of insurance is that the customer’s insurance needs could change over time. Then their policy may not fit current needs. For example if policy owner has a child they may want a higher level of term insurance. Then when the children are grown the term amount need could reduce. Another example is if a couple wanted enough coverage to pay off their mortgage. As the mortgage is paid down a smaller amount of insurance might be wanted. To address these concerns insurance companies introduced flexible universal policies.

Flexible universal life policies vary by company. Typically they allow the customer to adjust the amount of term coverage up or down within limits. After the first year the customer can also change the amount of payment. For example the customer could skip a payment or pay a smaller amount, whenever they want, as long as the cash value in the account is high enough. The customer can also pay extra to build the cash account if they wish. If the time comes when the policy is no longer wanted there is usually an option to surrender the policy and get the cash value that has built up. Other options usually include special riders and benefits. For example there could be a rider to provide a monthly disability benefit, add additional benefit for accidental death, add coverage for children, and various other options.

I am an insurance agent and after carefully considering my options I chose a variable life policy. Everyone’s needs are different so I suggest you visit with a good agent to review possible options. Make sure you understand the terms of the policy you select. And remember that life insurance often can extend for many years so it is important to deal with a very solid company.