One of the reasons that universal life insurance policies
have become so popular over the last 10 to 20 years in the flexibility that
they give the policy owner. For
instance, the policy owner can decide that more life insurance is needed,
perhaps after the birth of another child.
This can be done without increasing the premium by having more of the
premium going for insurance, and less going toward the separate account. Of course, the reverse can be true. After children have graduated from college,
less life insurance may be needed. This
could mean that the life insurance premiums remain the same, but more of it
goes toward the separate account.
In addition, if you hit a period of financial instability
due to the loss of a job or unplanned medical experiences, a universal life
policy can help to protect against that.
If you are unable to pay the premiums on your policy, you may be able to
lower your premiums so that you are just paying for the insurance and not
having any money going into the separate account. In addition, you may also be able to actually
have the money that has accrued in the separate account pay the premiums on the
life insurance until your period of financial instability is resolved.
This flexibility can be important to insure that you keep
your life insurance active and in force.
Many people cancel their life insurance during period when they are
facing increased spending, such as during the birth of a child, because they
cannot pay the premiums. It is during
these periods, however, when life insurance is most important. A universal life insurance policy can help to
protect against losing life insurance coverage.