As a physician puts together their life insurance strategy, it is important to consider all the products available and to land on the option or options most appropriate for their needs. Most people are very familiar with term life insurance policies that provide coverage for a limited amount of time for an affordable monthly premium. For those looking to add a savings component to their life insurance strategy while taking on heftier premiums, whole life insurance may be the course to pursue. There is a third option, universal life insurance, that combines affordable premiums with a savings component and allows flexibility regarding the death benefit. Like all insurance products, universal life has its pros and cons.

According to Investopedia, universal life is a permanent life insurance policy that remains in place for the lifetime of the insured as long as premium payments are made as stipulated. The premiums are relatively low and this product offers a savings component for those funds paid beyond the premium. Universal life insurance also touts flexibilities, as most policies allow for both premiums and death benefits to be adjusted.

Your premium for a universal life insurance policy includes the cost of insurance amount, which is what you need to pay to keep the policy going; the cost of insurance will vary based on the insured person’s age, insured risk amount, and health. The second component is the cash value, which can be seen as its savings portion. So, if your premium amount is $30 per month and you decide you can pay $50, the excess of the required premium will go toward your cash value.

Like a whole policy, you can take a loan against your cash value, but you will have to return it with interest or else risk a decrease in your death benefit.

Here’s the part that will sometimes trip investors up. The premiums will increase as you age. Hopefully, you will have enough in your cash value so that you may be able to cover the increase; if not, you risk your policy lapsing.

Experts at the Insurance Library praise the flexibility of this life insurance product while cautioning about the increasing premiums. Like so many other investment choices, it all comes down to what the best fit is for you and your family. Find a trusted insurance professional to guide you through the complexities of the insurance options available to you.