How Does Universal Life Insurance Work?

The cash value of universal life insurance grows on a tax-deferred basis, which means you pay taxes later when you withdraw your funds from the policy or when the insured passes away.

You can also choose to make withdrawals from this account if you need the money. There are no specific withdrawal limitations, however withdrawals made during the first contract year will reduce your death benefit by 10%.

After that, there are no limits to how much you can withdraw. However, if withdrawals exceed premiums paid by more than 100% in any given contract year, your death benefit may be reduced until the cash value account is brought back into balance.

The term for this type of insurance is “universal” because it can be used to tailor a policy that meets your needs. The flexibility of universal life insurance makes it ideal for high net-worth individuals.

We are more than happy to answer any questions you might have on Universal Life Insurance policies, and to help you make a selection on which kind of life insurance is best for your family. Click below to speak to our expert team today.