Universal Life Insurance

Universal Life Insurance can be more financially attractive, compared against a Term policy with the same premium and face amount.

Let's see why and how consumers should consider Universal Life Insurance.

Why buy universal life insurance?

For example, Universal Life Insurance can be a cost-saver for impaired risk consumers. Here is how it works.

Many times, applicants for life insurance receive a "rated" premium when they are approved for coverage. The rating represents an assessment of additional premium, due to the higher risk inherent in some medical condition or lifestyle issue.

A table of percentages above the Standard rate class (or Standard Plus rate class, depending on the carrier) serves as the basis for the extra cost. The greater the additional risk, the higher the table rating.

Interestingly, the higher cost of the rated premium can be mitigated by a Table Shaving program, whereby the carrier offers Standard rates to people who normally would be offered a rated premium.

However, this discounted premium would apply only to candidates with a relatively low rating -- and it would be available only on Universal Life Insurance products. Term products would not qualify.

So, this is one reason why a consumer would buy Universal Life Insurance

How to select universal life insurance?

Selecting your Universal Life Insurance product calls for a thoughtful comparison exercise, such as the following.

Do you need coverage for as long as possible?

Compare the rated Term policy against a Standard Universal Life policy with an identical face amount and identical premium amount.

Which product offers the longest guarantee period? The UL product could keep you covered longer!

Are you working with an extremely tight budget?

Compare the rated Term policy against a Standard Universal Life policy with an identical face amount and identical guarantee period.

Which has the cheapest premium? The UL product could save you some money!

Are you seeking the maximum benefit possible?

Compare the rated Term policy against a Standard Universal Life policy with an identical premium amount and identical guarantee period.

Which policy has the highest face amount? The UL product could provide a larger death benefit!

This is how you may wisely choose the Universal Life Insurance product that best meets your particular needs for coverage.

Points to remember about universal life insurance

If you think that you might be rated -- and you might have to choose between Term and Universal Life Insurance -- please keep the following points in mind.

(1) Carriers vary widely in how they assess different risks. Seek prequalification before you apply, so you will know that particular carrier is the right one for you.

(2) Universal Life is a flexible product, and it carries different trade-offs. If you design it to provide guarantees, then you will receive a smaller cash accumulation than if you design it without the guarantees.

(3) Remember, you have a "free look period." Carriers offer anywhere between 10 and 30 days (after the issue date) for you to decide whether or not to keep the policy. This goes for both Term and Universal Life Insurance.

Best wishes for health and success,

Steve Kobrin