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WHAT ARE THE RISKS OF A UNIVERSAL LIFE INSURANCE POLICY?

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WHAT ARE THE RISKS OF A UNIVERSAL LIFE INSURANCE POLICY?

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Although Universal insurance policies are appropriate in the right circumstances, they have failed to live up to their initial potential as the complete solution to most whole life insurance needs. Moreover, universal insurance can prove to be costly if not appropriately communicated to the insurer. A similar type of policy that was developed from universal life policies is the variable universal life insurance policy, or VUL. VUL’s allow the cash value to be directed to numerous accounts that operate like mutual funds and can be invested in stock or bond investments with greater risk and potential reward. Getting back to the topic at hand; Universal life insurance is not convertible which means if your policy lapses you either have to shell out more money to re-instate it or walk away frustrated and uninsured! To better understand why, lets look at how universal life insurance works. HOW DOES UNIVERSAL INSURANCE(UL) WORK? Think of a Universal life policy as a bucket into which you pou

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Peter Paul

UL is a complex policy with risk to the policyholder. Its flexible premiums include a risk that the policyholder may need to pay a greater than planned premium in order to maintain the policy.

Investment Plans

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According to AccuQuote universal life insurance allows flexibility as the owner of the policy can change the face amount or the premium amount according to changing circumstances in his/her life. The returns on a universal policy depend on the economy. Rarely do you get the kind of returns that were initially advertised by your agent.  In addition, there are plenty of administrative costs attached to it. Consider whether this life insurance option is really worth it before buying.  You might want to settle for term and invest the difference in the investments of your choice.

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