How does a Universal Life policy handle missed premium payments?

A Universal Life policy is designed with flexibility to adjust premium payments and death benefits. If a policyholder misses a premium payment, the policy does not automatically cancel or lapse immediately. Instead, it is structured to allow the policy to remain in force if there is enough cash value available.

The cash value accumulated in the Universal Life policy can be utilized to cover the missed premium payment, as long as there are sufficient funds available. This aspect of Universal Life insurance provides a safety net for policyholders who may experience temporary financial difficulties, allowing them to maintain coverage rather than risking cancellation.

This flexibility can be contrasted with other types of policies, such as whole life, which may have stricter guidelines on missed payments. In Universal Life policies, the ability to utilize cash value is a significant benefit, ensuring that insured individuals retain protection even during challenging times.