Single Premium Universal Life is paid for by a single, substantial, initial payment. As long as the Cost of Insurance charges depletes the account, the policy will remain in force.

What you should do before buying the Universal Life:

As with every important purchase, it's crucial that you understand just what you're buying when you shop for Universal Life Insurance. Even an inexpensive policy, if not designed to meet your particular financial needs, can result in money down the drain.

Why Universal Life?

•  The inner workings of the investment process are openly displayed in the policy, whereas details of whole life investments tend to be quite scarce.

•  The insurance company breaks down the Variable Premiums into insurance and savings. So you can adjust the proportions of the policy.

•  If the savings are earning a poor return, they can be used to pay the premiums instead of injecting more money.

•  If the holder remains insurable, more of the premium can be applied to insurance, increasing the death benefit.

•  Unlike with whole life, the cash value investments grow at a variable rate that is adjusted monthly.

•  There is usually a minimum rate of return.

•  These allow you to take advantage of rising interest rates. The falling interest rates may cause premiums to increase and even cause the policy to lapse if interest can no longer pay a portion of the insurance costs.

•  Universal Life is used a tax-advantaged way to purchase life insurance.

•  When the contract is new, premium far exceeds the cost of insurance charges. But as long as the policy remains in force, the difference will grow into Tax deferred Cash Value.

•  If you hold the policy until death, the inside build-up will be entirely tax-free or access the inside build-up via a policy loan without incurring it as taxable income.