Universal Life Insurance
Universal life insurance is a type of cash value life insurance that offers the low-cost protection of term life insurance with the savings element of whole life insurance. It also offers flexible premiums, a tax-deferred investment opportunity to the insured individual, and a level or increasing death benefit. With universal life insurance, premiums are paid into the policy’s account value where it earns interest. Each month, certain deductions are made from the account value, such as fees for insurance protection. The insured individual then has the option to make withdrawals or take loans from the account value for personal needs.
There are several key uses for universal life insurance that makes it popular amongst employees. First, it provides for families in the event of a loss of income or when mortgage or educational funds are needed. Funds can also be used for business planning, estate, and other special needs. As premiums are flexible, the insured gets to decide the amount of life insurance and the amount of premiums subject to policy minimums. The insurance also offers a death benefit that includes life insurance proceeds that are income tax free to the beneficiaries.