What Is Universal Life Insurance?

Universal life insurance is a type of permanent life insurance policy that combines a death benefit with a savings vehicle. With this type of policy, you’re guaranteed coverage for your entire life as long as you pay your monthly premiums. 

“You pay a premium each month, and it builds up a cash value that you can borrow from or withdraw later,” says Leslie Tayne, an attorney and the founder of Tayne Law Group, a debt relief firm in New York. Compared to whole life insurance, universal life insurance offers greater flexibility since it offers adjustable premiums and an adjustable death benefit. However, experts typically recommend term life insurance over both universal and whole life insurance.  

In general, experts warn against treating life insurance as an investment. “Life insurance is not meant to be an investment vehicle for the living,” says Jeremy Schneider, founder of Personal Finance Club. “The concept of insurance is to protect yourself financially if an unlikely but expensive bad thing happens — or in this case, protecting your loved ones who depend on your income in the case of your death.”

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