Q: Should I Consider A “Universal Term” Type Policy?
When the new “Universal Term” type life insurance plans were initially introduced both Dave and I were very cautious and carefully researched these plans, their contracts and the benefits they would provide for Dave’s listeners. Over time more and more life insurance companies began to offer this type of policy which created more exposure and opportunities to save money on the cost of life insurance. Though a Universal Term type plan is written on a Universal Life policy contract there really is very little functional difference between a term life plan and these new Universal Term policies. Numerous life insurance companies have introduced these new “Universal/Term ” life insurance plans to compete in the term life insurance marketplace. These programs are actually built to resemble and function similar to term life plans and compete with their low costs. They offer guaranteed level premiums (10,15,20 and 30 year), guaranteed death benefit, increased flexibility and have rates in many cases lower than other companies term life plans.
We only offer plans that comply with the criteria that Dave recommends to his listeners. Dave has carefully reviewed these new “Universal Term ” plans and determined that they are a valuable alternative, when priced competitively, and should be considered as they offer “low cost protection” similar to traditional term life plans. This does not change, in any way, his opinion of never using a life insurance policy as a savings or investment tool. Life Insurance should be purchased for the purpose of protection only and you should never save or invest in a life insurance policy. He has posted some information regarding this subject on his website which you can access by clicking on the attached link: http://www.daveramsey.com/universalterm . You can also learn more about the benefits of Term Life Insurance by clicking on Term vs. Cash Value.