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Steelhead Insurance Services Corp.
405 North Hayden Bay Drive
Portland, OR 97217
Phone: (877) 235-9299
E-mail: Dave@SteelheadInsurance.com

Universal life Insurance

Universal life insurance (often shortened to UL) is a type of permanent life insurance based on a cash value.  That is, the policy is established with the insurer where premium payments above the cost of insurance are credited to the cash value of the policy.  The return on the investments is credited to your policy tax-deferred.  The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance (COI) charge, as well as any other policy charges and fees which are drawn from the cash value if no premium payment is made that month.  The interest credited to the account is determined by the insurer; sometimes it is pegged to a financial index such as a bond or other interest rate index.  A guaranteed minimum interest rate is applied to the policy, which means that, no matter how the investments perform; the insurance company guarantees a certain minimum return on your money.  If the insurance company does well with its investments, the interest rate return on the accumulated cash value will increase.

Universal Life gives you the flexibility to adjust the death benefit as your needs change, as well as the flexibility to pay smaller or larger premiums - depending on your financial circumstances.  This is often an important feature for families who may have fluctuations in their ability to pay.  But, if your premium payments are too small for too long, the policy could lapse, leaving you without insurance protection.  Also, if the insurance company does poorly with its investments, the interest return on the cash portion of the policy will decrease (but never below the minimum interest rate guaranteed in the contract).  In this case, cash values will probably fall, forcing you to pay more premiums in the later years.

Other types of UL policies sometimes referred to as no-lapse guarantee policies, build very little cash values and expire after 100yrs old are ideal for estate planning.

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