Why Worry About the Maturity Date?

Universal life insurance is a form of permanent life insurance that can come with a caveat to the ‘permanence’ because of the maturity date. Universal life insurance policies come with a maturity date – a kind of ‘expiration date.’ This means universal life insurance can expire, so it’s important to review the policy specifications for any product you might be considering purchasing. In most cases, the reason companies set a maturity date is so they can calculate the life insurance premiums that are payable.  

Generally, these maturity dates can coincide with an advanced age such as 105, 118, 121, or beyond. However, some plans reach maturity dates as early as age 85, meaning you could potentially be alive once the plan reaches its maturity date – especially as life expectancy continues to increase.  

If you are alive when your universal life insurance plan matures, generally you may receive a payment and the policy ends.  The exact payment amount depends on the policy, but it may be the full death benefit or the cash value amount. It is also important to note that the proceeds from a policy maturing could be taxable. If you pass away before the maturity date of your policy, your beneficiaries will receive the death benefit outlined in your particular policy. 

What Kinds of Universal Life Insurance Are Available?

If you’re wondering about how or when a policy matures, you might be wondering about the different kinds of universal life insurance policies. There are multiple types of individually owned universal life insurance, which is why exploring your options with an insurance agent or financial advisor can help you find the plan that may work best for your needs. 

Group universal life insurance works a little differently. This policy offers life insurance coverage at group rates that may be more affordable, and members may have the opportunity to set aside money that has the potential to grow cash value. Accumulated cash value typically earns tax-deferred interest, as does individual life insurance. However, group life policies are typically only available through an employer or an affiliated membership group. 

Other product types include: 

Indexed Universal Life Insurance

With Indexed Universal Life insurance policies, the cash value is tied to a market index, although not directly invested in the market or an index. However, gains are usually capped or limited– meaning there are limits to how much money you may gain based on how a particular index performs. IUL is not an investment and therefore policy holders cannot experience a loss as a result of negative index performance (though fees and expenses can impact cash value). With many IUL policies, you may also have the option of choosing a fixed-rate account, which earns a fixed interest rate and isn’t dependent on market performance. 

This type of policy can build cash value that is generally regarded as a little more uncertain than fixed universal life insurance, simply because of the relationship to the stock market. However, for policyholders who are looking to potentially grow cash value while still protecting their families, it may be a good fit. 

Variable Universal Life Insurance

Variable Universal Life insurance allows policyholders to tie their cash value gains directly to the market in the form of mutual fund-like subaccounts. These subaccounts are structured to mirror the performance of  mutual funds. You can choose the allocation of how your payments to suit your risk tolerance and investment objectives.   However, tying these values to these policies could also result in subsequent losses, which are not always capped. This means variable policies could be perceived as more volatile, and these kinds of policies may also require more hands-on management. However, they could also offer greater growth potential.

Guaranteed Universal Life Insurance

Guaranteed Universal Life insurance, sometimes called Fixed Universal Life, is often regarded as the most secure UL policy because premiums typically remain consistent and stable, with policyholders paying a fixed amount throughout the life of the policy. These policies may have little cash value accumulation potential, yet the option to pay fixed premiums may make this option more appealing to some customers. 

Plan for the Future

If you’re considering purchasing life insurance, the decision may feel somewhat intangible – but it’s important to remember that life insurance isn’t solely about death.  

As you research your options, it’s vital to consider the benefits and cost of each life insurance policy and to speak to a trusted advisor who can help you decide which policy is best for you and your family.  

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