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Universal Life ​Insurance

Flexible lifelong coverage with a built-in savings component you can control

overview

Universal life insurance is a flexible, permanent form of coverage that not only protects your loved ones for life but also builds cash value on a tax-deferred basis. Unlike term policies, universal life insurance offers the ability to adjust your premium payments and death benefits over time, adapting to your changing financial needs. This dynamic approach makes it a versatile financial tool, providing both lifelong security and the opportunity for long-term wealth accumulation. Additionally, it can serve as a valuable resource for supplementing retirement income or addressing unforeseen financial challenges through policy loans or withdrawals. With its adaptability and dual purpose as both protection and an investment vehicle, universal life insurance is an excellent choice for those who value flexibility and a forward-thinking approach to financial planning.

Some important things you should think about

01

Universal Life Insurance Offers Flexible Premium Payments

Universal life insurance allows you to adjust your premium payments over time, giving you the freedom to contribute more when you have extra cash or less during tighter financial periods. This flexibility helps ensure that your policy remains adequately funded while adapting to your changing financial circumstances, making it easier to maintain lifelong coverage without rigid payment schedules.

02

Adjustable Death Benefit Options

Many universal life policies let you modify your death benefit to align with evolving financial needs. You can choose between a level death benefit or an increasing one that combines the base amount with the accumulated cash value, offering the versatility to better support income replacement, estate planning, or other financial objectives as your situation changes.

03

Cash Value Accumulation and Tax-Deferred Growth

A portion of your premium is allocated to a cash value component that grows over time on a tax-deferred basis. This cash value can be accessed through loans or withdrawals in times of need, providing an additional layer of financial flexibility. However, it's important to manage these withdrawals carefully, as they can reduce the eventual death benefit if not repaid.

You are a good fit for Universal Life Insurance if:

1. you Want Permanent Coverage with Flexibility

Why it's a good fit for you

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    Universal life (UL) is permanent insurance, meaning it can last for your entire life as long as required premiums are paid.
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    Unlike whole life, it offers flexibility in premium payments and death benefits, letting you adjust coverage as your financial needs change. 

Key Considerations

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    Adjustable Death Benefit: You can increase or decrease your death benefit (subject to underwriting if you increase).
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    Changing Premiums: You can pay more in good years or less in tight years, as long as the policy’s cash value can cover the cost of insurance.
2. you're looking for a Cash Value Component with More Growth Potential

Why it's a good fit for you

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    Universal life policies include a cash value, which generally grows at a rate tied to current interest rates (or an index, in the case of Indexed Universal Life).
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    The potential for returns may be higher than whole life’s guaranteed rate—though usually not as variable as fully investment-driven options like variable universal life.

Key Considerations

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    Interest Rate Sensitivity: UL cash value can fluctuate with prevailing rates, so in lower interest environments, growth may be minimal.
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    Indexed UL: With an indexed universal life policy, growth is tied to a market index (e.g., S&P 500) but often has caps and floors to manage risk.
3. you want Flexible Premium Payments

Why it's a good fit for you

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    UL allows you to adjust premium amounts over time, as long as there’s enough cash value to cover policy costs.
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    This is especially appealing for those who might experience variable income or expect financial changes in the future.

Key Considerations

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    Policy Funding: If you underpay for a long period, the cash value could deplete, causing the policy to lapse.
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    Monitoring: You need to keep an eye on the policy’s performance to ensure it remains adequately funded.
4. you're Seeking a Balance Between Coverage and Investment

Why it's a good fit for you

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    Universal life can serve as a hybrid approach: you get permanent insurance along with a tax-deferred cash value that can potentially grow more than a whole life policy.
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    It’s less rigid than whole life, which can be beneficial if you want some level of control or are open to adjusting coverage over time.

Key Considerations

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    Active Management: UL policies typically require periodic reviews or adjustments, unlike set-it-and-forget-it whole life.
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    Fees and Charges: Depending on the policy, there can be various administrative fees, mortality charges, or caps in the case of indexed UL.
5. ​you're Comfortable with Moderate Complexity

Why it's a good fit for you

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    Universal life insurance is more complex than term or whole life; you’re managing both insurance and investment components, and you have decisions to make about premium payments and coverage levels.
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    This can appeal to those who want some control but not the full market exposure (or complexity) of variable universal life.

Key Considerations

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    Policy Illustration: Always review illustrations carefully—projected returns can differ significantly from actual performance.
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    Ongoing Adjustments: You or your advisor should revisit the policy regularly to ensure it still aligns with your financial goals.
6. you're looking for Supplemental Retirement Income

Why it's a good fit for you

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    Over time, the cash value in a UL policy can be accessed through loans or withdrawals—potentially helping to supplement retirement.
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    Withdrawals and loans can be tax-free if managed properly, though they reduce the death benefit.

Key Considerations

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    Long-Term Horizon: You typically need to fund the policy for many years to build substantial cash value.
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    Impact on Death Benefit: Using the cash value while alive (via loans/withdrawals) can decrease what beneficiaries receive unless repaid.
7. ​you Need it Estate Planning and Wealth Transfer Purposes

Why it's a good fit for you

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    Like other permanent policies, universal life can be used to transfer wealth or pay estate taxes.
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    The flexibility in premium and death benefit can help individuals who anticipate changes in their estate over time.

Key Considerations

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    Trust Ownership: If the policy is owned by an irrevocable life insurance trust (ILIT), the death benefit can pass outside your estate, but setup must be done correctly.
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    Policy Riders: Certain riders (e.g., long-term care riders) can add extra functionality for estate or health planning.

Universal Life Insurance - Summing it all up

Universal life insurance is a type of permanent coverage that offers significant flexibility, allowing you to adjust both premium payments and death benefits as your financial needs change over time. Unlike term life insurance, universal life policies include a cash value component that grows on a tax-deferred basis, providing you with a built-in savings feature. This cash value can be accessed through loans or withdrawals, offering additional financial flexibility to supplement retirement income or cover unexpected expenses.

The adjustable nature of universal life insurance makes it especially appealing for those with fluctuating financial circumstances. You can increase or decrease premium payments based on your current situation, ensuring the policy remains adequately funded during leaner periods while still capitalizing on growth opportunities in better times. Overall, universal life insurance not only provides lifelong protection for your loved ones but also serves as a versatile financial tool that contributes to long-term wealth accumulation and security.

Still not sure?

If you're still unsure if Universal Life Insurance is right for you, don't worry. Go to our FREE Insurance Screening Tool. It will ask you a series of questions. Then, based upon your answers it will make personalized recommendations based on your financial situation and goals. Please note that this tool is completely FREE and anonymous, and does not require a phone number, email address or name to get the results.

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