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Universal life is type of permanent insurance coverage that is more flexible than regular whole life. As with other permanent life insurance products, many universal life policies have a cash value component. With universal life, you have more control over several important parts of the policy:
To keep your life insurance policy in force, you need to make your premium payments to cover the cost of the insurance. Regular whole life charges a flat premium rate that you aren’t able to adjust. However, within the limits of your contract, universal life will let you adjust how much premium you pay and how often you pay it. You can also use any cash value in your policy to cover your premiums.
When you first buy some types of universal life insurance, you are able to decide how long you want to guarantee that the policy will remain in force. You can choose a set period of years, up to your entire lifetime. A longer guarantee period makes the cost of your insurance higher. A shorter guarantee period means the cost of your insurance will start out lower but will begin going up once the guarantee period ends.
If you buy the type of universal life policy that contains guarantees that the insurance will remain in force, you can also choose how the policy adjusts for the rising cost of insurance after the guarantee period. With most such universal life policies, after the guarantee period ends, your premiums will increase. In addition to traditional universal life policies, Protective offers a unique product that adjusts the death benefit instead. This means that the premium of your policy will remain level even after the guarantee period ends, while your death benefit will begin getting smaller to make up for the higher cost of insurance.