Universal life insurance policies should be reviewed periodically

May 19, 2011

Universal insurance should be reviewed periodically to determine if it is still the most effective life insurance choice for that policyholder.

As the life insurance industry has grown, a number of different policy types have developed with unique features. One type of insurance that came about between the 1950s and 60s is universal life and variable universal insurance. MD News says the policies, which combine life insurance with a cash investment, need to be checked in on periodically, to determine their value and if the policy is still effective.

The source says these types of policies were previously thought of as "buy and hold" investments. However, that concept should be adjusted to suit the current market.

"Life insurance products today may still be designed as buy-and-hold investments, but a volatile financial market can have a negative impact on investment returns, which can cause a policy to fail. Buy and hold should now mean, 'buy and review periodically,'" the source says.

MD News recommends reviewing a policy and determining if it still suits the policyholder's long term goals after considering the value and expenses the policy carries. Based on that determination, they can decide whether to change, maintain, or terminate the policy.

For those interested in a less risky and potentially less expensive policy, term life insurance may be a better option. Experts say term insurance often costs less than other options and can generally be renewed when the time period of the policy is complete.  

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