Which coverage allows policyowners to withdraw funds without voiding the policy?

Universal life insurance is designed with flexible premium payments and a cash value component that accumulates over time. This unique structure allows policyowners to withdraw funds from the cash value portion of their policy without voiding the insurance coverage.

When policyowners opt to withdraw funds from a universal life policy, they are essentially taking out a portion of the accumulated cash value. This withdrawal does not terminate the policy, provided it does not exceed the cash value. In fact, universal life policies often include the ability for the insured to adjust the death benefit and premiums, further enhancing their flexibility.

In contrast, whole life insurance provides a guaranteed cash value and also allows for loans against that value, but withdrawals can affect the death benefit. Term life policies do not have a cash value component at all and thus do not allow for withdrawals. Equity index whole life policies also typically provide a cash value but may have restrictions and different handling of withdrawals compared to universal life. Therefore, the flexibility of universal life coverage to allow withdrawals without voiding the policy is a key characteristic that makes it the correct choice.