Four Types Of Consumers Who Should Purchase Universal Life Insurance

It can be hard for the average consumer to know what kind of protection to purchase. After all, a number of different types exist. Universal life insurance is one of the most popular forms. However, some consumers will benefit more from this type than other consumers.

Consumers have two major types of insurance to choose from, generally speaking: term and whole life. Term policies are temporary: that is, the consumer purchases coverage for a specified amount of time.

These policies can be held for as little as one year, and some are held 25 years or more. The buyer must go through the renewal and approval process every time the specified term expires.

Universal life insurance policies are considered "whole life". In other words, the consumer expects to hold the policy for an indefinite number of years, perhaps his whole lifetime. The consumer will never have to go through the application or medical screening process again, as long as he continues to pay his premiums on time every month.

One type isn't necessarily better than another. Each type has its own advantages that must be weighed against factors like age and lifestyle. The types of consumers who may receive the most benefits from universal life insurance, however, are:

1) The young: People in their twenties and thirties are generally in better health than those 40 and older. Health issues can affect how much a buyer's monthly premium will cost him. Therefore, it makes good financial sense to purchase universal life coverage during the period of life when one's health is typically at its optimum.

Fortunately, once a consumer buys such a policy, his premiums will not change. This holds true even if he develops health problems later on in life.

The consumer will never have to go through another health screening. Neither will his coverage be dropped if he gets sick, as long as he doesn't cancel the policy.

Additionally, purchasers have the option of increasing their monthly premiums. The increase becomes an investment, which creates a cash value for the policy. The earlier a consumer starts building up this cash value, the more interest he stands to make.

2) Non-smokers: As already noted, health is a significant factor in the granting of any type of policy. Every insurance company assigns great risk to the smoking buyer.

They simply assume that this kind of buyer will develop smoking-related health problems at some point in life. Therefore, the smoker usually pays significantly more than the non-smoker.

Sometimes, in fact, the premiums for smokers are so high that many can't afford universal life insurance. Instead, they must rely on term policies to provide for them and their loved ones.

If you happen to be a non-smoker, rest assured that you're paying much lower premiums that those who smoke. It's worth investing in a long-term policy when you know your cost will be lower and you'll be able to hold it as long as you live.

3) Parents of young children: People with children must think about their family's future. Risking leaving behind children and a spouse or perhaps just children with no means for financial advancement is simply poor planning. Children need to be provided for in the event of the death of one or more parents.

Purchasing protection ensures that one's children will be cared for, should the unthinkable occur. As already noted, the earlier one begins investing, the more he will be able to leave behind for his family.

4) Those who want to leave an endowment: Besides caring for one's family, many consumers desire to bestow a financial gift. Some have a church or a charity they would like to leave a lasting legacy to.

Universal life insurance can help him do this. He can leave his death benefit to his family and his policy's cash value to a charity, for example.

Many policy providers have "insurance calculators". These handy tools allow a potential buyer to quickly input basic personal and health information.

The tool then calculates how much the buyer would have to pay for universal life insurance premiums based on that information. These four factors are a few of the ones used by the calculators to come up with a customized figure.