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What is universal life insurance?

Universal life insurance is a form of cash value insurance. It has flexible premiums and a flexible cash value. Growth of the cash value is tax-deferred as long as it is not withdrawn prior to death. You can, however, withdraw cash up to the amount of the premiums you have paid in without tax consequences. Growth in cash value is never taxed at all if it is distributed to beneficiaries as a death benefit.

In some policies, there is an increasing death benefit and slower cash value growth; in others, the death benefit stays steady while the cash value grows more rapidly. Premiums can be either fixed or variable and paid monthly, quarterly, or annually.




Brenda Procter, M.S., Consumer and Family Economics, College of Human Environmental Sciences, University of Missouri-Columbia














If you'd like to learn more about this and other personal finance topics, the University of Missouri offers 'Personal & Family Finance,' a correspondence course, through the Center for Distance and Independent Study (800-609-3727). Information about this course is available at





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Last update: Monday, July 21, 2008




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