Universal life insurance (UL) is one of two types of permanent insurance. The other is whole-life insurance. A universal policy, like real life, can provide lifetime protection and build cash value with tax benefits. UL allows you to increase or decrease your premiums within certain limits so that it may cost less than full coverage. It does not offer the same guarantees as whole life. If you pay too few premiums, it could impact your cash value and reduce the amount of your death benefit.


Whole-life policies guarantee that premiums, cash values growth, and death benefits will not change. All these aspects are made flexible by UL. Cash value growth can be affected by the amount you pay for premiums. Cash value growth is affected by how much you use. This will impact the amount that your family receives after you are gone. It can lead to policy lapse. Keep in touch with your financial professional so they can ensure that your policy continues to meet all your needs.

how does universal life insurance work


In a whole-life policy, the premiums, cash value growth, and death benefit are guaranteed not to change. With UL, all those things are designed to be flexible. However, the amount of premiums you pay affects cash value growth. And as you use funds from the cash value, it will affect the amount your family receives when you're gone. It could even cause the policy to lapse, so you should stay in contact with your financial professional to help make sure your policy continues to meet your needs.

how does universal life insurance work
variable universal life vs term insurance

variable universal life vs term insurance


Keep in mind that it will affect your cash value. If yours isn't, you will need the rest to replace your policy.

what is a variable universal life insurance policy


Universal life insurance is a type of permanent life insurance. Unlike term life insurance, which is meant for a specific period, such as 20 years, universal life insurance is in effect for the rest of your life (unless you stop making premium payments).

is a variable universal life insurance policy a good investment

is a variable universal life insurance policy a good investment


More specifically, the cash value component earns interest based on a money market rate of interest or, for some types of universal policies, a rate tied to a market index. Whatever you make will increase your cash value, helping you pay your premium. Lowering your monthly payments can be helpful if your financial situation changes.

universal life insurance death benefit


Policyholders have certain flexibility compared to other types of permanent life insurance policies in that you can lower your premium payments or change your death benefit amount. Plus, the cash value component offers more potential to earn more interest – on the flip side, the value can go down over time.

universal life insurance death benefit