Editor’s note: This is the third in a four-part series on exploring the benefits of life insurance. The final part will appear in the March 5 issue of the AFN.

Life insurance is a great option for people who want to enhance their financial security. Universal life insurance takes this security a step further by generally allowing you to modify your premium payments and death benefits, subject to certain limitations.

A universal life policy is similar to other types of permanent life insurance in that it can accumulate tax deferred cash value. As the policy owner, you can generally borrow against any cash value while the policy is still active, or collect any cash value in full – less any surrender fee and outstanding policy loans

– if you decide to end the policy.

Unlike other types of life insurance, a universal life policy offers added flexibility that allows you to adjust your premium payment and death benefit, with certain limitations.

As you become more financially secure, you can make additional premium payments that can increase the cash value of the policy. These additional payments are subject to maximum amounts set by law.

If your financial situation becomes less stable, you may be able to temporarily lower or stop payments as long as the policy has enough surrender value to pay the monthly insurance deduction, loan interest and policy fees. Premium payments are subject to minimum requirements provided in the policy.

Some universal life insurance policies also include an “adjustable death benefit,” which generally allows you to change the death benefit amount – up or down – without having to issue a new policy. Increases may be subject to insurability. You will not be able to decrease the benefit below the minimum policy size and certain decreases may have adverse tax consequences.

If you are interested in learning more about universal life insurance, sit down with an agent you trust to determine if it’s a product that’s right for you.

• Jay Gandee has been an agent for American Family Insurance since 2011. His office is located at 4730 E. Warner Road, Suite 12, in Ahwatukee. Contact him at (480) 785-7777.

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