Universal Life Insurance

Universal life insurance contracts differ from traditional whole life policies by separating the "protection element", the "expense element" and the "cash

The “cash value element” accumulates on a tax-deferred basis. Withdrawals from the “cash value element” can be income tax-free if structured properly.

value element." Dividing the policy into these three components allows the insurance company to build a higher degree of flexibility into the contract. This flexibility allows (within certain guidelines) the policy owner to modify the policy face amount or premium in response to changing needs and circumstances.

A monthly charge for both the “protection element” and the “expense element” is deducted from the policy's account balance. The remainder of the premium is allocated to the “cash value element.” Because of these internal charges against the “cash value element” of the policy (and unlike traditional whole life policies), complete disclosure of the charge is provided to policyholders in the form of an annual statement.

Tax-deferred accumulation and a potentially non-taxable payout make life insurance a very strong financial tool. Universal life provides the policy owner with greater flexibility and higher yield potential than traditional whole life policies.

In many situations, the combination of low term insurance rates, a competitive yield on the “cash value element,” and tax benefits make the universal life contract a viable alternative to more conventional investment vehicles.

Call our EMPLOYEE BENEFITS & LIFE INSURANCE DIVISION today
- 1.914.244.1055 x140 -
to talk to our experienced team of professional's about your insurance needs, or email Thomas Boeglin - our life insurance specialist - directly.

Major Benefits

Policyholder has a versatile and flexible tool to accommodate ever changing business, financial and family circumstances.
In many situations, the combination of low term insurance rates, a competitive yield on the “cash value element,” and tax benefits make the universal life contract a viable alternative to more conventional investment vehicles. A policyholder can easily combine the need for life insurance with long-term savings goals such as college education or retirement.
Future premiums, based on interest rates and past premiums, may be increased, decreased, or even skipped, without causing the policy to lapse.
Unlike other investment vehicles, the cash value within a universal life contract may be accessed through withdrawals or partial surrenders, or through no penalty, non-taxed loan*. Such distributions generally decrease policy cash values and death benefits. Funds that have been borrowed continue to earn interest, though usually a lower rate. The rate charged to borrow the funds is usually far lower than the current open market rates.
The “cash value element” accumulates on a tax-deferred basis.
Withdrawals from the “cash value element” can be income tax-free if structured properly

*=Loans and withdrawals from policies classified as “modified endowment contracts” are subject to current income tax and, if the policy holder is under age 59 ½, an additional 10% penalty tax.

Find Out More About Life Insurance

Considerations when purchasing a life insurance

Types of Life Insurance

Survivorship Life Insurance

Term Life Insurance

Universal Life Insurance

Value of Cash Value Life Insurance