Universal Life Insurance
Universal life insurance is flexible premium permanent insurance, with policy charges, credited interest, death benefit options, and funding considerations to weigh against your objectives.
Flexibility Within a Permanent Structure
Universal life is permanent insurance that, unlike whole life, offers flexibility in both premiums and the death benefit. Within policy limits, you may adjust the amount and timing of premium payments, and in some cases choose between death benefit options, subject to underwriting and policy terms.
The policy accumulates cash value based on credited interest and policy charges. Credited interest is tied to rates declared by the insurer, subject to any policy specified minimum.
Cash Value and Credited Interest
Eligible universal life policies may accumulate cash value over time as credited interest accrues, less policy charges. The potential for cash value growth within eligible policies depends on the credited rate, the funding level, and the policy charges.
Accessing cash value through loans or withdrawals may reduce the death benefit and cash value, may create lapse risk, and can have tax consequences. These features should be understood before you rely on them.
Death Benefit Options
Universal life policies often offer a choice between a level death benefit and an increasing death benefit that includes the cash value. The option you select affects both the premium required and how the policy performs over time, and it may be changeable under the policy terms.
Lapse Risk and Funding
Because universal life is flexible, it is also possible to underfund it. Insufficient funding, or unfavorable policy performance such as lower credited interest than assumed, can cause a policy to lapse, meaning the coverage ends unless additional premium is paid.
Managing a universal life policy requires ongoing attention. We help clients understand the funding assumptions behind their illustrations and what circumstances could require additional premium over time.
Our Approach
We explain how credited interest, policy charges, and funding choices interact so you can make informed decisions. For clients who value flexibility, universal life can be appealing. For those who prefer certainty, we may suggest guaranteed or whole life alternatives. The right fit depends on your goals and risk tolerance.