Universal life insurance uniquely combines permanent life insurance protection with the benefits of tax-advantaged investing.
You may have heard the saying: “buy term insurance and invest the difference,” well universal life takes care of both … all in one policy. And while it does have an investment component, you can decide to pay only the insurance and administrative costs each month and not use the investment component at all.
With universal life insurance, you pay an amount of money (usually monthly) that is deposited into one or more investment accounts (see the section Investing in your future).
Each month, the insurance company takes out money to cover the cost of the insurance and administrative costs.
The money left in the investment account earns a return based on the performance of the investment account(s) you’ve chosen inside your policy.
