Types of Universal Life Policies

The longtime managing partner of Bergen Financial Group, Darcy Bergen focuses on key retirement planning areas, including social security and risk management. Darcy Bergen organizes several financial workshops for seniors that discuss important insurance products, such as universal life policies. 

Universal life insurance premiums go toward a death benefit, similar to a term-life policy, and investments. If a policy is purchased early in life, the investments may grow large enough to cover the premium costs, making the policy self-sustaining. The invested portion can be cashed out at any time and used for large purchases, such as college tuition or a house.

There are two different models for universal life policies. Traditional plans offer a guaranteed minimum interest rate that can rise depending on the performance of the economy. 

Meanwhile, indexed plans are exposed to derivative market products. In a high-performing market, an indexed policy may pay out a high-interest rate, which usually ranges between 10 percent and 12 percent.