Universal Life Insurance is a permanent yet flexible policy that allows the insurer to customize coverage and premiums to their specifications.
Payments (premiums) are made towards your account value upon which time it begins accruing interest. Monthly deductions and charges are then taken from the account value (insurance protection charges, etc).
Essentially, premiums made above the cost of the insurance are credited as cash value towards the policy which can later be withdrawn or taken out as loans.
Some typical uses can include but are not limited to:
- Final expenses
- Income replacement
- Debt coverage
- Estate liquidity and replacement
- Educational needs
- Pension maximization
- and many more
Benefits of having a Universal Life Insurance Policy:
- Flexible – The insurer decides the amount of insurance and premium payments they make and receive (subject to policy minimums)
- Death benefit – proceeds are tax free to the beneficiary
- Tax deferred cash growth – under federal income tax law
- Access to cash value – cash can be accessed at any time
Universal Life Insurance offers greater flexibility over Whole Life Insurance in that the insurer can easily transfer money between the insurance and savings policy components. Also, the cash value of the plan grows at a variable rate which adjusts monthly.
While we don’t generally endorse or promote universal life insurance, we do work with companies that can provide further guidance and advice. Life insurance can be a very useful tool to protect your family against the unexpected, please your fee only financial planner for more information.