Universal Life Insurance
More Options, But Fewer Guarantees
Universal Life Insurance is permanent insurance that provides protection in case of death, as well as a savings or cash value component. The cash value of a universal life policy is based on the amount of premiums you pay, the declared interest crediting rate and the policy charges. Unlike Term Life insurance or Whole Life insurance flexible premium universal life policies permit flexibility in the amount and timing of premium payments (within limits), and they generally offer you the ability to vary the death benefit amount based on your circumstances. However, some policies include a No Lapse Guarantee that guarantees your policy will not lapse for a specific period of time as long as required premium levels are met. Such policies offer less premium and death benefit flexibility.
Universal Life Insurance costs less than Whole Life, and offers more flexibility in the timing and amount of premium payments. In general, there are fewer guarantees with regard to cash value or death benefit.
Universal Life Insurance costs less than Whole Life, and offers more flexibility in the timing and amount of premium payments. In general, there are fewer guarantees with regard to cash value or death benefit.
- Premium payments are flexible. After initial payment, you make additional premium payments at virtually any time and in any amount (subject to certain minimums and maximums). Note: Policies with No Lapse Guarantees have greater restictions on the amount and timing of permium payments.
- Your policy continues as long as there is enough cash value to cover monthly insurance charges or if the No Lapse Guarantee is in effect.
- Cash value earns interest at a rate set periodically by the insurance company and is generally guaranteed not to drop below a certain level. Policies with No Lapse Guarantees tend to have less cash value.
- Level benefit equal to the policy’s original Face Amount, OR
- Variable benefit equal to the original Face Amount plus any existing policy account value.
Advantages of Universal Life Insurance
- Potentially lower initial premium compared to Whole Life Insurance
- Potential availability of a No Lapse Guarantee
- You can generally determine the amount and timing of premium payments, within certain limits
- You can generally increase or decrease the Face Amount. Note: Increases may require evidence of insurability and decreases may result in the imposition of pro rata surrender charges.
Disadvantages of Universal Life Insurance
- Fewer guarantees than Whole Life Insurance
- Skipping payments can lead to policy funding problems
- Adding guaranteed features, like a No Lapse Guarantee, can increase the cost of Universal Life
- Growth in cash value in the policy is limited
- No investment flexibility
- A decrease in the death benefit amount may result in the imposition of pro rata surrender charges
Life insurance is issued by AXA Equitable Life Insurance Company (NY, NY). Universal life insurance is co-distributed by AXA Distributors, LLC and AXA Advisors, LLC, members FINRA, SIPC. AXA Equitable, AXA Distributors and AXA Advisors are affiliated companies and do not provide legal or tax advice. All guarantees are based on the claims-paying ability of AXA Equitable. The guarantees do not apply to investment portfolios.
