Universal Life Insurance Comparison

Universal Life Insurance comparisons should focus on more than just rates and quotes. It is important to select the right type of coverage, find a plan with the right features, and pick between a variety of policy options to best meet your needs.

A growing family should compare four Universal Life Insurance components:

* Comparison to temporary coverage: term life insurance
* Features: cash value accumulation, credited interest rates, additional paid in premium.
* Riders: guaranteed purchase option, long term care coverage, spouse and dependent term life riders, and waiver of premium.
* Quotes: compare premium rates

You should also compare universal life insurance to other types of permanent cash value policies such as whole life, and to temporary policies such as term life.

Permanent coverage is designed for the "WHEN" in life: when the kids finish paying for college, when I retire, and when I die.  Cash value policies such as universal life insurance are designed to be in place when these events occur.

Universal life insurance is an alternative form of permanent coverage that offers flexibility: the ability to vary premiums, cash values, and death benefits to meeting changing needs.

Whole life insurance provides guarantees.  A guaranteed death benefit will not change as long as premiums are paid when due.  Guaranteed premiums promises level premiums over time.  And guaranteed cash values earn tax deferred interest at pre-determined rates.   

Term life insurance addresses the "IF" in life. Term life insurance makes the most sense when the need for coverage will disappear at some point, such as once college expenses have been put to rest. It addresses the question of: "what if I die before paying for the kids’ education?", or "what if I die with no assets for my spouse to draw upon?"

It is also important to compare universal life insurance features which many companies will build into the base policy: cash value accumulation, credited interest rates, and additional paid in premium are some of the common features you should compare.

Universal life insurance offers flexible premiums and death benefit amounts.  Along with the flexibility comes cash value which earns tax deferred interest as the cash accumulates inside your policy.  Your insurance agent will provide you with a full ledge illustration of projected cash values over time.  Their underwriting will determine the proportion of premium allocated to your death benefit and cash accumulation. 

Credited interest rates are important to compare as this will impact your cash accumulation and the stability of your policy over time.  Each policy will have differing levels of interest rate guarantees and expectations.

Additional paid in premium allows you to accelerate the level of tax deferred cash accumulation inside your policy – subject to IRS limits and guidelines.  The ability to modify your premium payments over time is one of the advantages of a universal life insurance policy.

Compare Universal life insurance riders as your second to last step.  Some common Universal life insurance rider options include guaranteed purchase option, long term care coverage, spouse and dependent term life coverage, and waiver of premium benefit. 

A long term care rider is a unique option within universal life insurance allowing it to address three big concerns of most families: what if I die early, what if I outlive my assets, and what if I wind up in a nursing home?  The death benefit and cash accumulation answer the first two questions, and this rider addresses the last.  Should you need extended care for activities of daily living, you can tap into your policy to cover a portion of these expenses. 

Guaranteed purchase option allows you to purchase additional coverage with no evidence of insurability.  Make sure you compare the age limit on this feature. 

Many Universal life insurance policies provide an option to attach spouse and dependent term life coverage into a single policy.  Compare the rates of adding these other family members as riders as opposed to applying for individual plans.  Sometimes the rates, convenience, and simplicity of a single policy make the most sense.

A waiver of premium rider waives all premiums in the event that you become totally disabled.  Many people get sick, lose their income, and drop their Universal life insurance coverage to cut costs.  Once returning to work, they may no longer qualify for coverage.  This rider addresses this concern.