Universal Life Insurance is a type of Permanent Life Insurance that provides flexible premiums and the ability to adjust the death benefit. It combines the features of Term Life Insurance, which provides protection for a specific period of time, with the savings element of Permanent Life Insurance, which builds cash value over time. There are several types of Universal Life Insurance, a couple of which we can dive deeper on are:

• Indexed Universal Life Insurance
• Variable Universal Life Insurance

See the individual FAQs for each type to learn more.

A type of Permanent Life Insurance that provides both a death benefit and a savings or investment component. It is similar to Indexed Universal Life Insurance but with the added feature of allowing policyholders to allocate their cash value into different investment options, such as mutual funds. One of the main advantages of VUL insurance is that it allows policyholders to participate in the potential growth of the stock market or other securities, and also allows them to have more control over the investment options of their cash value. Visit our VUL product page to learn more.

Universal Life Insurance offers several advantages over Term Life Insurance, including:

• Flexible Premiums: Unlike other types of life insurance, Universal Life Insurance allows policyholders to adjust the premium amount and payment frequency based on their changing financial situation.
• Cash Value Accumulation : Universal Life Insurance policies have a cash value component that grows over time, based on interest rates and investment returns.
• Tax Benefits: The cash value of a Universal Life Insurance policy grows tax-deferred, meaning that policyholders do not pay taxes on the earnings until they withdraw them.
• Permanent Coverage: Universal Life Insurance provides coverage for the insured's entire lifetime*, as long as premiums are paid.
• Customizable Death Benefit: Universal Life Insurance policies typically allow policyholders to adjust the death benefit amount over time. This can be useful for those who want to increase or decrease their coverage based on changes in their financial situation.

*Policies typically mature, meaning they pay out the benefit amount, if the policyholder lives to be 120 or 121 years old (could be shorter, depending on the policy).
Learn more about how Universal Life Insurance compares to other insurance and wealth building vehicles in our Guide to Life Insurance.

There are several factors that can help determine whether Universal Life Insurance is right for you at this stage of your life, but here are the high-level criteria to help you determine if this tool is right for you:

• Are you looking for a: death benefit? First and foremost, Amplify only recommends Universal Life Insurance to those looking for some form of coverage in the event of their death. If you’re only considering Universal Life for its cash value savings component then it’s probably not the best option for you.
• Do you have sufficient free-cash flow? Because Universal Life Insurance has higher premiums than Term Life Insurance, Amplify typically only recommends Universal Life Insurance to those who can afford the higher monthly payments. If money is tight, or your income is highly variable then there are other ways to get coverage that might work better for you.
• Does it make sense for you at this stage of life?: There are several tax-advantaged accounts that are great tools for building wealth. Your life situation typically determines which of these accounts you can leverage. For example, if you are able to contribute to a 401k through your employer, Amplify typically recommends you contribute to that account first, especially if your employer offers some kind of matching. Ultimately, which tax-advantaged vehicles you leverage as part of your holistic financial plan really depends on your goals, risk tolerance, stage of life, and several other factors.

Ultimately, we’ve seen Universal Life Insurance work well for clients of all different types. If you’re unsure whether Universal Life is right for you, check out our website or give us a call. We can offer personalized recommendations that are right for you.

Cash value is a powerful savings and investment tool offered within a Permanent Life Insurance policy that can help you achieve your financial goals. Cash value life insurance can be used to generate tax-efficient growth, save for retirement, generate income, and provide liquidity for future needs. Additionally, cash value policies are an important aspect of succession planning and offer protection against creditors and legal cases in most states. With its many benefits, cash value life insurance is an excellent choice for those seeking long-term financial security.
Learn more about building wealth with life insurance in our Guide to Life Insurance.