Universal Life Insurance (UL)
Universal Life is defined as a flexible policy with two components:
- Life insurance coverage, and
- Cash accumulation.
UL gives you with the flexibility to adjust your premium payment and death benefit, and provides life-long protection with death benefits and may build up cash value. This policy remains in place for the entire life of the insured individual unless the policy lapses or is cancelled. If premiums are paid over the life of the policy to keep it in force, there will be sufficient funds to cover the cost of the insurance component (COI) and add to the cash value. If you do not have a long-term need for life insurance, this could be the wrong type of insurance for you. This type of policy may work best if your earnings fluctuate from pay period to pay period.
Universal Life Insurance includes:
- Death benefit (face amount) may be adjusted up1 or down depending on the amount of premium payments you are comfortable with
- Premium payments are flexible depending on your financial circumstances and after the initial payment is made
- Premium amounts can be the minimum amount, the target/ideal amount, or a larger amount
- Cash value earnings are calculated monthly and earn a variable rate of interest
- Ability to select a payment schedule that fits your needs (annual, semi-annual, quarterly, monthly or a combination)
- Mortality rates, administrative expenses, and fees apply, and may possibly negatively affect your accumulated cash value should the insurance company’s investment portfolio underperform or premium payments are insufficient
- Offers a Secondary Guarantee (aka No-Lapse Guarantee). Policies with No Lapse Guarantees tend to have less cash value
- Premium costs are generally lower than whole or variable life
1Evidence of insurability is required if the face amount is increased.
Guarantees are based on the claims paying ability of the issuing company.