Managing Universal Life Policy - Part 1

To manage your policy, you need complete, accurate, and prompt reports on what is going on within the policy.

Insurance companies have the technology to track and provide this data, so ask for a current report from your agent or company. It is your money.

INTEREST RATE ADVANTAGE

Insurance companies may be able to pay slightly higher than current market interest rates on the policy accounts within their universal life policies. They guarantee those rates for a 12-month period and can be fairly sure that most of the money on which they are paying interest will remain with the company for more than 1 year.

If experience bears this out, the company will be able to lend out reserves of these policies for periods somewhat longer than 12 months and, as a result, earn a higher rate of return for you. You can expect universal life interest rates to track the interest rate you see in your newspaper for 3- to 5-year U.S. Treasury bonds.

Universal life is a single-pocket policy providing no invest­ment flexibility. You may want to look at a multiple-pocket policy similar to your multiple-pocket 401(k) plan, so you can diversify for greater safety and a higher return.