Universal life insurance protects you for life and builds up value over time that you can use for anything, anytime. It also gives you the flexibility to adjust your policy along the way as your life and needs change. It lets you choose the amount of your death benefit and how much you pay in premiums, as well as when you pay them.
You can start with a specific amount to meet your current needs. But if things shift down the road, you have the option to increase or even change the type of death benefit (within limits) to fit your situation.
Flexible premiums
You get to choose how much you pay, and when, which can be helpful if your cashflow fluctuates. Keep in mind, premiums will increase with age (based on the difference between the death benefit and cash value). And as long as there's enough cash value to pay your policy's monthly fees, your coverage will continue.1
Cash value
Use it for anything, anytime, usually without owing taxes. You can help pay for an emergency, home repair, college tuition, even invest in your business, whatever you need.2 However, your policy could lapse if the net accumulated value of the policy is less than the monthly fees.
Questions about universal life insurance? We've got answers.
Universal life protects the people you love and gives you the flexibility to choose the amount of your death benefit, how much you pay in premiums, and when you pay them (within certain limits). Cash value earns interest every day, and expenses are taken out monthly. As long as your policy has enough accumulated value to pay for your policy's monthly expenses, your coverage will keep going. It will also build cash value that can be used for anything, anytime.2 Find out more on how universal life works.
How they're similar:
Both are types of permanent life insurance
Both build cash value over time
How they're different:
Whole life comes with a guaranteed death benefit, while universal life comes with a flexible death benefit.
Whole life comes with set premiums, while universal life comes with flexible premiums.
The best one for you depends on your goals. Both universal life and whole life insurance give you lifelong coverage.3 And they build cash value over time that you can use for anything you need throughout your life.2
Universal life comes with flexible premiums, while whole life comes with set premiums. Whole life can also earn dividends (although they're not guaranteed, we've paid them every year since 1872). You can take your dividends as cash, pay your premiums, or increase your coverage (and cash value).
Universal life lets you choose how much you pay in premiums and when you pay them (within certain limits) as your circumstances change. While you may eventually have to pay higher premiums to keep your coverage, that flexibility can make it easier to keep your insurance policy in force if your earnings vary, like if you're self-employed, own a business, or earn money through royalties. Ask an advisor if universal life is right for you. Connect with one today.
A portion of your premiums goes toward a savings component called cash value. Like a whole life policy, the cash value earns interest, typically at a rate set by the insurance company. You'll earn interest on both the principal and the accrued interest. The growth is usually tax-deferred, so you won't pay taxes on the gains until you withdraw them.
Your policy's cash value is an asset that you can use for anything, anytime. It can be used for emergencies, like a home repair or a business investment. You can take money out of your policy as a withdrawal up to the amount of the premium you've paid so far without paying taxes. You can also take a loan against your cash value up to the amount of the premiums you've paid so far or use the policy's cash value as collateral for a loan from a bank. If you choose to surrender your entire policy, you can take all of its cash value, but you'll also be surrendering your coverage.2 Ready to get started on your policy? Connect with an advisor.
When the person insured dies, the beneficiary (or beneficiaries) receives the death benefit. The insurance company will keep the account's remaining cash value. The beneficiary won't get any of the cash value because the policyowner can only use it while they're alive. In general, the value of the death benefit will be less if the policyowner withdrew or borrowed against the cash value at some point. Still have questions? Connect with an advisor.
Yes, this pool of money is called cash value. The cash value of a policy is an asset that you can use for anything, anytime. It can be used for emergencies, like a home repair or a business investment. You can withdraw money from a universal life insurance policy up to the amount of the premiums you've paid so far without paying taxes. One of our advisors can give you more details. Get matched with one today.
Yes. You can take out a policy loan. Interest is charged on the loan, but there's no financial underwriting. So you can borrow at any time against your policy up to the amount of the premiums you've paid so far, and the repayment terms are flexible. You can repay on your own terms or allow the loan interest to be added to the loan.
However, the amount of the loan will reduce your death benefit until it's repaid.2 Also keep in mind, the loan must be carefully managed to avoid any tax consequences. Want to find out more on borrowing against life insurance? Read our guide or connect with an advisor.
There isn't a dividend per se. Unlike whole life insurance, a universal life policy doesn't give you the chance to earn a dividend. Rather, it has an interest-crediting rate. Ask an advisor which insurance is right for your needs and goals. Get matched today.
The cash value of your policy grows tax-deferred, meaning you won't pay taxes on the gains as long as they're kept within the policy.
Tax-free withdrawals and loans:
You can typically take loans or withdrawals from the policy's cash value tax-free up to the amount of the premiums you've paid so far, as long as the policy remains in force.
Tax-free death benefit:
Usually, the death benefit paid to your beneficiaries is tax-free.
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What types of universal life insurance policies does Northwestern Mutual offer?
Custom Universal Life
Have more flexibility when it comes to choosing the amount of your death benefit and your premium payment schedule. This type of policy insures one person and builds cash value, tax-deferred.
Survivorship Universal Life
Similar to Custom Universal Life, except Survivorship Universal Life lets you insure two people and pays the death benefit upon the death of the second person
Variable Universal Life
Just like Universal Life, you'll get lifelong protection,3 cash value accumulation,2 and an adjustable premium,4 plus you can choose how to invest5 the cash value to help produce greater returns.
This coverage combines Survivorship and Variable features. You can insure two people and get the death benefit when the second person dies. Plus, you can choose investment options5 for the cash value.
Make a plan for tomorrow today.
When you work with Northwestern Mutual, we listen to the goals you have and design a financial plan tailored specifically to your life. Universal life insurance is a flexible tool that could be an important part of your plan. It can give you lifelong protection while helping you meet more of your financial goals. Find out more about how we plan.
