The universal life policyholder buys a policy in which the underlying investments will build cash value over time. The policyholder funds the policy for a certain number of years and the growth in the cash value eventually negates the need for additional premiums. At retirement the policyholder can withdraw cash as a tax-free loan for retirement. The loans are never repaid and the only result is that the death benefit is reduced. Among the limitations of this strategy are that the underlying investments may perform below expectations, the policyholder may not be able to fund the policy at the expected level, and the policyholder might withdraw too much cash from the policy, thus triggering a taxable event.

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