Universal life is a permanent plan with a cash value and can be structured to perform in a way that is similar to a term policy and a permanent life policy.
A universal life plan can simulate a term policy by structuring the premium to fund the policy for a set period, It may also be structured to respond as a whole life by setting the premium to carry the policy until death (up to age 120 in many plans). The premium and funding are the mechanisms that create the difference.
Since a universal life plan has cash value, borrowing against the cash value or withdrawing from the cash value is oftentimes an advantage when utilizing this type of plan for retirement income planning.
Universal Life is often used for:
- Mortgage protection
- Financial protection due to death
- Business planning, Key-Person and Buy-Sell agreements
- Retirement Planning
- Estate Tax Planning