Universal Life Insurance

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What is it?

Universal Life Insurance gives consumers flexibility in the premium payments, death benefits and the savings element of their policy. Like Whole Life Insurance, Universal Life Insurance is a type of permanent life insurance. The policy lasts the duration of the insured’s life and has a cash value accumulation benefit.

What's covered?

Similar to Whole Life Insurance, Universal Life Insurance provides two distinct purposes:
  1. It provides income replacement for the beneficiaries after the insured is deceased.
  2. It also can provide a way to build cash value as a method of saving.
The cash value can accrue tax-deferred and can be borrowed or withdrawn:
  • If the policyholder removes funds from the policy’s cash value, repayment of the money is optional.
  • If the insured were to pass away while there is still a cash balance due, the amount that was removed would be subtracted from the death benefit that is paid out to the beneficiary.

How does it work?

  1. Unlike Whole Life or Term Life Insurance, Universal Life Insurance provides the ability to vary your premium payments and the amount of the death benefit, which allows for some flexibility.
  2. With a Universal Life Insurance policy, you can choose to make payments above the cost of the insurance. The extra funds are placed into an account that earns interest so the funds can grow over time.
  3. This type of policy might suit you if you’re envisioning significant income fluctuations or you think that you may want the ability to vary your premium payments.