Universal Life insurance are extremely flexible in terms of their policies. This is due to the fact that it comes from either the accumulated value or the annual premium paid. You just have to make sure that there is sufficient cash value within the policy to cover the cost, and you could choose to not pay for the premium.
Obviously, the older you are the higher the cost for the insurance will be; thus, it is important that there is enough in the account to cover for the cost. Because of its flexibility, the amount of coverage could be increased or decreased easily. You may be asked to show or prove your insurability again, if you decide to increase the coverage, and you won’t need to justify the decrease in the amount of coverage. The flexibility of the Universal Life Insurance could also be very attractive, as you could change it in accordance to your needs.
On the other hand, the flexibility of the premium may also be a drawback. If you were cut back on your premiums in the earlier lifespan of the policy, you may find that in later years that you will be subjected to a larger premium.
In addition to that, if the interest rate declines, your investment account may not grow fast enough to cover the cost of insurance. Not to mention that there is always a misconception that because of the flexibility with the payment of the premium, the premium will one day be paid in full – and that’s not a fact. Even if it did disappear, it would be most likely that it would reappear again when the interest rates declined beyond the cost. All in all, like any other decisions to make, there are always both the pros and cons to pay attention to.
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