What is universal life insurance? It's permanent life insurance – like whole life – with coverage that lasts a lifetime and builds actual cash value. A universal life ...Fromthefirstdaythepolicyisineffect,universallifeprovidesadeathbenefittohelpprotectyourfamily’sfinancialwellbeing–andthecashvaluecanprovidenumerousadvantageswhileyou’restillalive.Youcanborrowmoneyagainstit,useittopaypremiums,orevensurrenderyourpolicyforcashtoliveoninretirement.2 Itcanalsoserveasapowerfulestateplanningtool.3However,thedeathbenefitinauniversallifeinsurancepolicyisadjustable,andcashvaluegrowthisn’tguaranteed–inpartbecausethey’reaffectedbythepremiumsyoudecidetopayintothepolicy.Ontheotherhand,thepaymentflexibilitycanmaketheadvantagesofapermanentinsurancepolicyeasiertoobtain–especiallyforbusinessownersandsales-relatedprofessionalswhoseincomevariesfromyeartoyear.HowuniversallifeinsuranceworksTherearetwopartstoauniversallifepremiumpayment:acostofinsurancecomponent(orCOI)andacashvaluecomponent.Dependingontheinsurancepolicy,there’sanupperandlowerlimittohowmuchthetotalpremiumamountcanbe.TheCOIcoversthecostofprovidingthedeathbenefitandadministrativefees,andthatistypicallytheminimumpremiumamountneededtokeepthepolicyineffect.TheCOIrisesovertimebecauseitismainlybasedonthepolicyholder’sage.AnypremiumspaidovertheCOIamountaddtothepolicy’scashvalue,subjecttothelimitsinthepolicy. CashvaluegrowthWhileauniversallifepolicydoesn’tpaydividendslikeaGuardianwholelifepolicy,itcanprovidecashvaluegrowthalongwithsimilartaxdeferral,loancollateral,andpremiumpaymentbenefits.Differenttypesofuniversallifepoliciescalculatecashgrowthindifferentways:Standardpoliciesprovideaninterestratethatcanvarybutwon’tgobelowasetminimum.With Guardian,thatinterestrateistiedtotheinsurancecompany’sgeneralaccountassetsbutisguaranteednevertobelowerthan2.5%annually–andthatinterestratecanpotentiallygohigher. It’simportanttoknowthatminimumpremiumpaymentsreducetheaccumulationofcashvalue.Ascostofinsurancerisesovertime,thiscanevencausecashvalueer