Universal Life insurance is a combination of term life insurance and a tax-deferred savings plan paying a variable return. There is a guaranteed interest rate and cost of insurance set which stipulates how long the policy is guaranteed to last. This can be as long as age 121 with some UL products, so that the policy is then considered permanent insurance.
Some Universal Life products, especially Indexed Universal Life or Variable Universal Life, are designed to generate cash value. They may or may not have a guaranteed lifetime no lapse feature.
Universal Life is an adjustable and flexible policy that can often be tweaked to meet the needs of the insured over a lifetime.
Founder, Abrams Insurance Solutions, Inc., San Diego, CA
Universal life is a flexible premium policy meaning that there is a range of premiums that can be paid for the policy. The minimum premium will only support a death benefit that may or may not be guaranteed. The owner of the policy may want to pay more than the minimum premium to use the policy for cash accumulation. Indexed Universal Life policies are especially good for accumulating cash to access tax free through loans or withdrawals for college funding, retirement income, or emergencies.
A universal life insurance policy is is a two part contract containing renewable term insurance and a cash value account for which the interest rate varies. There is usually a minimum guaranteed interest rate. Premiums are deposited in the cash value account after the company deducts its fees and the cost for the term coverage. Universal Life is a flexible type of permanent life insurance.
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Some Universal Life products, especially Indexed Universal Life or Variable Universal Life, are designed to generate cash value. They may or may not have a guaranteed lifetime no lapse feature.
Universal Life is an adjustable and flexible policy that can often be tweaked to meet the needs of the insured over a lifetime.