Typically, guaranteed universal life has the lowest risk, while variable universal life has the most chance because the cash value is tied to stocks and bonds. On the flip side, you can potentially build more cash value with indexed universal life and variable universal life than guaranteed universal life.


A UL insurance policy can have many options beyond whole life and term coverage. A policy should be managed. It must be decided how much you want for premiums. If you have variable UL you also need to make investment choices. These variables, and rising insurance costs over time, can impact your cash value. Keep an eye on your cash value over time. If it is lower than zero, your premiums could rise or your policy may be cancelled.

how does a universal life insurance policy work


As long as the money in your cash value remains in your policy, your funds will continue to experience income-tax-free growth. However, the accumulated cash value could go down, depending on the type of universal policy, if your investments underperform. However, you will have to pay taxes once you withdraw money, and your death benefit can decrease. If you decide to terminate your policy, you can keep most or all of your accumulated cash value.

how does a universal life insurance policy work
universal life policy death benefit

universal life policy death benefit


Universal life insurance is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums and fulfill any other requirements of their approach to maintain coverage. Like many permanent life policies, universal life insurance combines a savings component (called "cash value") with lifelong protection. When you pass away, the policy's death benefit is paid out to your beneficiaries.

is variable universal life insurance a good investment


In that you can decrease your premium payments, or adjust your death benefit amount, policyholders have more flexibility to choose from permanent life insurance policies. In addition, the cash component is more likely to earn interest. However, it's possible for the value of the policy to decline over time.

is universal life insurance worth it

is universal life insurance worth it


The policy's cash value grows tax-deferred, so no taxes are owed on current earnings or interest. Also, the death benefit is paid income-tax-free to beneficiaries.

does universal life insurance have a cash value


We will tell you everything you need about universal insurance and discuss the different types. You should consult a professional financial advisor or life insurance agent before you consider these policies. They can be quite complex.

does universal life insurance have a cash value