Universal Life Insurance

When you make a premium payment on a universal life policy, a portion of that payment is allocated to your policy’s cash value. The cost of keeping the policy in force is subtracted from that cash value every month. The length of time you choose to pay your premiums — and the amount you pay — determines how much cash value your policy can accumulate. You may be able to increase the death benefit, and you may be able to lower or even stop your premium payments in the future if the policy has accumulated sufficient cash value. Read more about how life insurance works.

The monthly cost of keeping a universal life policy in force depends, in part, on:

• your age (as you get older, the cost of insurance goes up), your health, whether you smoke
• the size of the death benefit you want.

You choose how much premium to pay, within contract limits. You can choose to pay more than the policy costs today and build cash value that can help cover the cost of the policy later. If you have sufficient cash value already, you can choose to pay less than the cost of the policy or even not pay for a while.

Because universal life insurance offers flexibility — to change premiums or the amount of coverage — it may be a good option to consider if you want coverage to last your lifetime. It might also be useful if you have big, long-term savings goals and you need both life insurance and a way to build cash value to help meet them.

Universal life insurance includes various policy types that let you choose how you want your cash value to earn interest.

Index universal life insurance allows you to allocate part of your premium in two market index accounts. You can choose either or both to help you grow your cash value, with growth potential tied to a market index. Unlike investing directly in the stock market, an index universal life policy guarantees a percent floor that may help you protect your assets from market-related losses in years when indexes perform poorly.

This indexed arrangement offers the potential for more rapid growth with the protection of the floor, but it may be a little more unpredictable than a traditional universal life insurance policy.

Yes. Flexible premiums are a key feature of universal life insurance policies. Each month, you can pay the minimum or you can choose to pay more, up to IRS limits. You may also choose to skip a payment or even stop paying premiums in the future if your policy has enough cash value to cover its costs. Paying more than the minimum premium allows your policy to build more cash value over time. If you pay less, your policy stays in force as long as you have enough cash value to cover the current charges, but your coverage may not stay in place for your entire lifetime.

Yes. Universal life insurance has flexible death benefits, within the limits of your contract. You can change the amount of coverage (your death benefit) by adding more coverage or reducing coverage if the remaining policy still meets minimum policy requirements. Adding more coverage may result in additional underwriting requirements.