Universal life insurance is a flexible product that allows the policy owner to modify death benefit and premiums during the life of the policy. It has two sets of rates: current company practice and contractual guarantees. If can be utilized as a traditional coverage or protection product as well as a supplemental retirement income strategy. Those who purchase universal life buy it for the flexibility the product offers.
Universal Life has many uses because there are many types of UL policies and they can be further manipulated to accomplish different financial goals.
Guaranteed no lapse universal life will pay out the death benefit at death at any age. The premium is guaranteed not to go up for the entire time the policy is in effect, or it can be paid in a lump sum or over several years. Most people purchase this type of policy, not for cash value, but for longevity. It has a relatively low premium for permanent life insurance.
Indexed Universal Life or Variable Universal Life is usually purchased for the cash value feature. Therefore, the person who buys IUL or GUL will have different characteristics than the person buying the GUL described above.
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Guaranteed no lapse universal life will pay out the death benefit at death at any age. The premium is guaranteed not to go up for the entire time the policy is in effect, or it can be paid in a lump sum or over several years. Most people purchase this type of policy, not for cash value, but for longevity. It has a relatively low premium for permanent life insurance.
Indexed Universal Life or Variable Universal Life is usually purchased for the cash value feature. Therefore, the person who buys IUL or GUL will have different characteristics than the person buying the GUL described above.