Secure Yours and Your Loved Ones Future
There are a few different types of of Universal Life Insurance available and we’ve detailed some of the key questions our clients typically have below. We offer hyper-personalised services tailored to your needs. Available 24/7 we are ready to speak with you on your requirements, no matter the complexity.
* Enness does not give investment advise and works with a network of partners to execute ULI business.
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Universal Life Insurance FAQs
How does Universal Life Insurance Work?
The premium amount is determined as any other policy – based on age, gender, health, etc. and the funds are usually invested by the provider into very safe funds like gilts & government bonds – again like other policies. The unique aspect of universal life insurance is that the funds are also exposed against an index e.g. the S&P 500, which opens up the possibility for the cash element to grow significantly in value.
What's the difference between ULI and whole life insurance?
Both these policies will pay a tax-free lump sum upon death, but the key difference is that a guaranteed whole-of-life policy does not have the cash value component, and that can be used in a client's lifetime in addition to the death benefit. Once premiums are paid on a guaranteed whole-of-life policy, they are not available for the client to access again.
What are the main benefits of ULI?
The cash element of the policy means that the funds you invest into a policy can be utilised in your lifetime, making this a much more efficient and exciting way to achieve life cover.
The funds can be withdrawn, acting as a source of income, or lent against at favourable rates. Ultimately, the policy can be surrendered for a cash sum, as opposed to traditional policies, where there is no cash element and no funds to be received should you wish to cancel the policy.
It is also protected from market downturns, as ULI policies have a floor, i.e. a minimum guaranteed rate, which protects your investment. Therefore, even if the market performs poorly, the funds invested in the policy are protected (usually be 2-3%).
What are the potential drawbacks that need to be considered?
It is a relatively complex product and should be carefully considered with the correct financial advice before proceeding. It is essential to consider the tax position and determine whether this is the right product for you. Finally, with the floor mentioned above, there is also a cap on returns, but it is generous and doesn't usually impact long-term returns.
Who should consider ULI?
ULI is suited to HNW’s looking to diversify their portfolio while also accomplishing a death benefit for their loved ones. Owing to its low-risk nature, it also serves well for those looking to secure themselves an income in retirement. It is suited to those who would like to secure a cheaper source of funding owing to the competitive loans available against it.
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