Answer:
Withdrawals from a policy's cash value reduce the death benefit.
Explanation:
Universal life insurance is a permanent life insurance plan that has flexible premium payments and premiums are also low.
Only a determined death benefit is paid to the policy holder's beneficiary.
As premium is paid to the account, it earns interest. The excess amount above the death benefit is called the cash value.
Policy holder is allowed to withdraw the cash value and the withdrawal is subject to taxation.
However these withdrawals do not affect the death benefit which is fixed. Policy holder cannot withdraw into the death benefit amount.
When the policy holder does the insurance company keeps the cash value (excess over dear benefit amount). While the beneficiary gets only the agreed death benefit.
So the statement - Withdrawals from a policy's cash value reduce the death benefit.
Is untrue.
