A whole life insurance policy is designed to provide protection for your entire life, with built in savings options. There are different types of whole life: participating and non-participating.
Participating whole life policies are eligible to receive policy dividends. These dividends are not guaranteed but have the potential to enhance a policy’s long-term value. Dividends increase the value of a policies face value or payout value.
Non-participating whole life policies have level premiums and the face amount of insurance stays the same.
UL is the most flexible type of life insurance because it combines permanent life insurance with the benefits of a tax-advantaged investment allocation. You pay an amount of money that is equal to or greater than the Cost-Of-Insurance and administration.
Any excess deposits are placed into an investment account. Over time, as this investment account grows, you can utilize the investments to pay the Costs-of-Insurance in future years. The Investment account grows tax-free and is paid out to beneficiaries tax-free because it is part of the life insurance policy.
You may be able to borrow against the cash value of your Universal Life policy in the future to help fund kid’s education, or to enhance retirement spending.