Universal life
Cash Value Policies: Universal Life
Description Premiums Cash Value Advantages Disadvantages Uses
Term and cash value (investment) portion split into two distinct accounts; Investment is in insurer's general account Within limits, buyer controls premium amount; Depending on premium paid, can raise or lower face amount and amount going into investment account Amount depends on owner's choice of premium amounts and on the performance of the investment account Flexibility in premium payment, face amount, and amount going into cash value; Low-risk investments in insurer's general account; May give good investment return when interest rates are high No forced savings; Policy charges higher than traditional cash value policies; Return may be marginal; If investment account is not funded, policy is an expensive method to buy term insurance protection Young buyers; Buyers needing premium and face amount flexibility