Universal Life Insurance
Universal Life Insurance is a flexible life insurance contract. Universal life provides the policy owner the flexibility to adjust policy premium payments, adjust the face amount and the duration of coverage. Universal life insurance contracts came of age in the early 80’s when interest rates were high and traditional policies were somewhat limited and inflexible. Universal life contracts have the ability to build up cash value. Cash Values are the total premiums that are paid for the policy less the deductions for expense charges and the cost of insurance. The remaining premiums paid for the universal life insurance go into a policy account that earns interest. The universal life policy is similar to whole life insurance with the added flexibility to adjust some of the key factors within the contract. The value of this type of policy is in its flexibility. This type of policy shifts some of the risk for maintaining the death benefit from the insurance company to the insured. As with traditional policies, this type of policy allows for tax-favored cash value buildups and income tax free proceeds at death. Please keep all of these issues in mind when making your decision as to which type of policy to purchase.
Informational purposes only.