Universal life is a flexible permanent life insurance contract that is similar to traditional whole life in that it builds cash value and provides coverage for the life of the insured. However, unlike a whole policy, universal life insurance offers policy owners the ability to adjust the premium amount and the timing of the payments. Cash value growth is based upon a credited interest rate determined by the insurance company. There is a minimum interest rate that is guaranteed by the insurer and a non-guaranteed rate that may vary. There are some universal life contracts that can be tied to an index such as the S&P 500.

Flexible Premiums

Universal life insurance policies do not require annual premium to be paid each year. The policy will remain inforce as long as there is enough cash value to cover the cost of insurance. Allowing policy owners to determine the amount paid each year or even skip payments without losing their coverage. Universal life insurance is a great option for individuals seeking a long-term alternative to term insurance without the higher annual costs of a traditional whole policy.

Universal Life Policies Earn Cash Value

While the primary benefit of a life insurance policy is paid upon the death of the insured, permanent life insurance has an additional benefit which is available to the policy owner during life, called cash value. Cash value is earned within the policy and grows tax deferred, it is made up of the portion of the premium left over once administrative and insurance costs are paid.

The favorable tax treatment of the cash value makes it a valuable asset to policy owners looking towards retirement. Policy loans and withdrawals are available to the policy owner and may be used to meet a range of individual and business needs. Please contact us to learn more.