Universal life

Some quotes from an article:

UL is very inflexible. Premiums are locked in, so the client can’t take advantage of lower premiums that may become available. “And since there is little or no cash value, the cash value can’t be used to pay missed premiums.

First-year universal life commissions are 60% to 70% — compared with 90% for term life, with which it competes and is comparably priced. But universal life often is better for the client, because it has some cash value accumulation and can be written for longer terms, such as to age 100 or beyond. Most insurers won’t write term life once a client reaches a certain age.

Universal life premiums are especially attractive for clients age 45 and younger who are non-smokers. “They expect to live more than 30 years, so [a] 30-year term is not attractive to them, even if the premiums are somewhat less

Whole-life insurance accumulates a higher cash value because the premiums are about 40% to 60% higher. But universal life often accumulates at least enough cash value to reimburse policyholders for the premiums paid in.

The knock on universal life used to be that it was a good investment when interest rates were high, but decreasing interest rates could cause death benefits to be reduced dramatically. The interest-rate risk, in effect, was shifted from the insurer to the client. But now that many policies guarantee the death benefits, that no longer is a problem

Universal life has become more attractive to clients due to product innovations such as the guaranteed death benefits and survivorship features. The survivorship features help clients avoid probate expenses, because both spouses are covered.

Universal life is a good choice for advisers with clients who have money-market or bank accounts that are to be passed on to heirs. Transferring those assets into a universal life policy allows clients to pass them on to heirs as tax-free death benefits. Many clients buy universal life for other estate planning purposes, such as to pay estate taxes at the time of death.