A beneficial tool for estate planning problems: Universal Life

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Creating Wealth Beyond Money Blog

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by John Tetzloff
Advanced Case Specialist

For more permanent solutions to estate planning problems, universal life insurance can help protect assets and solve the long-term issues of estate liquidity.

When I meet with folks regarding their Estate Planning, a vital part of the process is identifying potential problems or shortfalls in their plan. The first step in this process is completing a thorough fact finder to help see the “big picture” to assist both the planner and the member in understanding those possible problems. Some common problems we encounter are the following:

  • Do we have enough cash on hand to cover estate costs such as taxes, income replacement, debts, farm/business succession plans, and child care issues?
  • How do we replace assets used for possible health care for heirs?
  • How to provide tax-free dollars to heirs? How do we maximize our charitable gifts at death?

Once the issues are identified, solutions are then presented. If a will, trust or other legal work is needed, I recommend that a person find a qualified attorney to assist in this part of the plan. If liquidity, leverage and tax issues are the problems, often the recommended solution is life insurance. Although life insurance is not for everyone, if health is good and the needs are there, it can be the best solution.

There are different types of life insurance we can use to accomplish our objectives above. Term Life insurance may be used for shorter term needs like child care, debts, mortgage and income replacement. Term insurance typically runs out after a period of time but it is an economical way to create the liquidity needed for the above mentioned shorter-term issues.

But for more permanent solutions, one type of life insurance that is used quite often is Universal Life. Permanent life insurance can help solve the longer term issues of estate liquidity, farm/business succession plans, tax bills and protection of assets with lifelong coverage. Universal Life offers great benefits that solve some of our planning issues for good:

  • The premiums may be adjusted over time to adjust to your ever-changing circumstances, budgets and finances.
  • The death benefit is guaranteed income tax free, which means you can count on what your beneficiaries will receive and they can count on that liquidity.
  • Tax-deferred cash-value can grow with each premium you pay, along with interest at a current guaranteed minimum rate every year. Cash value can be borrowed or withdrawn.*
  • Death benefits may be adjusted over time to meet changing circumstances — you’re never locked in.
  •   Universal Life has options to meet every family’s needs and planning issues.


The importance of state planning is not something we can avoid or put off for too long. There have been many circumstances where a plan was outdated or obsolete. Other times there isn’t a plan at all, which can lead to avoidable expenses, confusion, conflict and potential bad feelings within a family.

Please have the courage to openly discuss and communicate your estate plan with your Catholic United Financial Sales Rep. Remember, their job is to help identify the potential problems and pitfalls of the plan, or lack thereof, and then provide available solutions. By taking these important steps, we can help ensure that what you have gets to the right people at the right time with the least amount of cost and conflict. That is the mark of a good plan.

May God Bless you and your families.

Catholic United Financial and John Tetzloff are not permitted to give tax or legal advice. The information given is based on our understanding and interpretation of laws and regulations currently in effect. You may wish to consult your personal tax or legal advisor with questions about your specific situation. *Subject to Internal Revenue Service guidelines. Catholic United Financial does not provide tax or legal advice. Discuss all tax strategies with your CPA or tax attorney.