Universal Life Insurance

Universal life insurance introduces three new characteristics to this complicated world of life insurance:

• premium flexibility;
• death benefit options; and
• partial withdrawals.

Unlike other policies with fixed premiums, a universal life insurance policy allows the policyowner to determine the amount and frequency of premium payments and to adjust the face amount of the policy as long as the cash value is sufficient for the insurance company to withdraw the scheduled mortality and expense costs from the account. This offers a lot of flexibility to the policyowner. The policyowner can pay-in large amounts when funds become available and not pay at all when funds are not available. Additionally, the policyowner can increase or decrease the face value depending upon financial needs.

Universal life insurance policies generally have two death benefit options:

• policyowner designates a specific amount of death benefit. As the cash value grows the insurance portion of the death benefit decreases. If the cash value increases too rapidly, an additional amount of insurance is maintained. This is called the ‘corridor’.

• policyowner designates the death benefit to be the face amount plus the cash value (i.e., the insurance component does not decrease with cash value accumulation).

Universal life insurance policies can provide for partial withdrawal of the cash value, as opposed to a loan in whole life insurance policies.

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This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contract your insurance agent. Our articles are intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.