Ask an expert: Who is universal life insurance best for?
Licensed life insurance agent and CFF at Lift Financial
Universal life insurance is best for someone who is able to comfortably contribute the maximum premium the policy will allow. This type of plan comes with a minimum and a maximum premium. When you contribute more than the minimum, you will accumulate cash value in an interest earning account. This interest accrues tax-free, which can be significant in the long run. Accumulated cash can be used to pay the premiums in the future, or withdrawn and used for other needs you may have.
If you can contribute the maximum premium, it is easier to achieve the long-term benefits of the policy. But if you think you might have a difficult time making the premium payments, you may want to consider other options. This type of policy can have surrender charges, meaning if you’re unable to keep that plan for a specified amount of time, there is a cost to cancel.
Universal life plans can be a great tool for long-term insurance needs as well as cash accumulation to help supplement long term goals.