Whole Life Insurance is the original type of permanent life insurance. The premium is level, the cash value grows every year and the death benefit is guaranteed for life. That all makes sense. How, then is it possible for a Universal Life policy to have a level premium with a death benefit guaranteed for life, but with a cash value that is minuscule or non-existent? That doesn’t seem to make sense.
It’s all in the policy design… and it is possible… and if you are looking for the lowest level premium for a lifetime guaranteed death benefits, this class of Universal Life delivers just that. This current class of Universal Life uses a Secondary Guarantee to accomplish this. Although both the guaranteed and projected cash value on an illustration for this policy might drop to zero, there is another set of guarantees being used only for the purpose of calculating the guaranteed death benefit.