Feb 11, 2025
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Planning for the future can be tough, especially when it comes to finances. Unfortunately, not everyone is ready for what might happen after they’re gone.
According to the 2024 Financial Well-Being by Assurance, 35% of Americans who make less $75,000 a year have made no end-of-life plans at all, exposing their loved ones to the harsh realities of unforeseen expenses. Even among those who make $75,000 a year or more, 18% still don’t have end-of-life plans in place such as wills or insurance.
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“It’s crucial that we improve access to financial protection products for people earning below the median household income — half of our population.”
Among the variety of life insurance options, universal life insurance (UL) is a type of permanent life insurance that combines a death benefit with a cash value component and a built-in savings and investing feature.
But it has a controversial reputation among some personal finance experts with criticism ranging from complex premium structures to skepticism about its investment potential.
In a video interview with Moneywise, Tori Dunlap, founder of the financial education platform Her First $100K, dubbed indexed UL insurance as a “scam” — especially if people buy it as an investment.
Here’s a more detailed look at universal life insurance and one of its alternatives.
Universal vs term life insurance
Depending on which type of universal plan you choose, you may be charged a fixed or adjustable premium. Your premium will cover two things: the cost of insurance (COI) amount and cash value. Personal finance guru Dave Ramsey pointed this out as a downside to the insurance option on an episode of the Ramsey Show.
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“If you keep the stupid thing long enough it will begin to be the point that the premium you’re paying will not even cover the insurance cost. And so it starts to eat back into your savings just to keep the policy alive,” Ramsey said.
Life insurance has long been a divisive financial product that helps provide a financial safety net for your loved ones. However, the Assurance study concludes that choosing a life insurance policy “ can make a meaningful difference for their family’s economic fate.”
If you need something a little more flexible than universal life insurance, you should consider looking into term life insurance, which keeps you covered for the entire term of the policy.
By opting for term life insurance through a provider like Ethos, you are helping to ensure that your family will be taken care of after you’re gone. Term life insurance offers flexibility when you're seeking affordable coverage while balancing other financial responsibilities.
Ethos offers an easy online process that allows you to get up to $2 million in coverage with terms ranging from 10 to 30 years.
To get a free quote, all you have to do is answer a few questions about yourself. Then, you can compare coverage and choose the right policy that best suits your needs.
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Victoria Vesovski is a Toronto-based staff reporter at Moneywise covering personal finance, lifestyle and trending news. She holds degrees from the University of Toronto and New York University, and her work has appeared on platforms including Yahoo Finance, MSN Money and Apple News.
