eFinancial: Who Can Qualify for Universal Life Insurance?

Universal life insurance is a type of permanent life insurance that offers flexible death benefits, premiums, and cash value savings options. And while universal life insurance policies tend to be a more complex life insurance product, those searching for the right life insurance policy may be wondering if they’d even qualify. The good news is many people can qualify for universal life insurance, and there are different types to choose from.
What is universal life insurance?
Universal life insurance is a permanent policy that offers lifelong coverage. Like a term life insurance policy, it offers a death benefit that will be paid out to designated beneficiaries tax-free upon the policyholder’s death. But universal life insurance also builds cash value. And as cash value accrues, the gains grow tax-free.
When a policyholder makes a payment on a universal life insurance policy, some of that payment goes toward fees and premium, while the rest goes into the cash value account. And the policyholder can borrow against that cash value account while they’re alive, albeit for a fee, as with a whole life insurance policy.
But the big differentiator between whole life and universal life is that with a universal life policy, there’s flexibility to adjust the death benefit, premium payments, and savings option. And the types of changes that can be made depends on the policy.
Types of universal life insurance
There are three main types of universal life insurance:
Eligibility for universal life insurance
Several factors influence who may be approved for a universal life policy and how much it will cost:
The bottom line
A universal life insurance policy is a complex financial product that blends life insurance with an investment component. While anyone may qualify for a universal life insurance policy, insurers typically look for younger, healthy, risk-averse individuals to approve for the best rates. Those interested in a universal life insurance policy should consult with a financial advisor to advise on the right move for their unique financial situation.
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Source: eFinancial