In universal life insurance, what are the three death benefit options?

In universal life insurance, the three death benefit options are typically defined as follows: a level death benefit, an increasing death benefit, and a specified amount plus cash value.

The level death benefit means that the insurance payout to beneficiaries remains constant over the life of the policy. This can be beneficial for those who wish to ensure that their beneficiaries receive a predictable amount without fluctuations.

The increasing death benefit provides a payout that grows over time, reflecting the policy's accumulation of cash value. This option can be appealing as it helps keep pace with inflation and potentially provides more financial support to beneficiaries in the long run.

The specified amount plus cash value combines the fixed face amount of the policy with any accumulated cash value, thereby offering additional financial security based on the policy's performance.

Understanding these options is crucial because they reflect the flexible nature of universal life insurance, allowing policyholders to select a benefit structure that aligns with their financial goals and family needs. This variability is one of the key features that distinguishes universal life from other types of permanent life insurance.