Any premiums that have been collected that are in excess of the cost of insurance will be applied to the policy as a cash value. This is important to understand because that as you age, the cost of insurance will likely begin to rise to meet it. If you have accumulated enough cash value for your policy over time, it will be used to cover any increases that are associated with your cost of insurance amount to maintain a level premium. Similar to a savings account, a portion of the cash value of a universal life insurance policy can be accessed without affecting the death benefit they have been guaranteed.

While there is some risk associated with universal life insurance, the reward that they provide can be very beneficial if permanent life insurance is needed. If you are considering this type of policy, it is important to plan for rising insurance costs and ensure you are generating enough cash value to make up the difference. If you want to learn more about universal life insurance, we encourage you to reach out to our friendly and knowledgeable brokers at Anchor Financial Group.