Universal Life

Universal life is another type of permanent life insurance meaning coverage can last for your lifetime so long as premiums are paid. It’s also termed Adjustable life insurance because of the flexibility feature built into it. It allows you to reduce or increase your death benefit and to pay your premiums at any time in any amount after your first premium payment has been made. You can increase the face amount, subject to additional underwriting, or decrease it to a minimum without having to surrender the policy. Just like whole life, universal life insurance offers lifelong coverage. It’s less expensive, provides flexibility when it comes to paying premiums and choices for how the policy’s cash value is invested.

Cash value component and death benefits tend to be separated. For every premium payment made, a portion goes towards the cost of insurance to cover the death benefits and the rest is put in the cash value. The cash value is guaranteed with a minimum annual interest rate but may grow faster depending on the insurer’s market performance.

Because of its flexibility feature, you can access the funds using tax-free loans and withdrawals. You can also stop paying premiums if there is enough accumulated value in your policy to cover the cost of insurance each month.

Several types of Universal life should be considered if opting for universal rather whole life.

• Indexed Universal Life: IUL’s interest and cash values growth are tied to the performance of a major market index. offers greater control over the performance of your policy’s cash value growth. However, the guaranteed minimum interest rate is typically lower than that of a traditional universal life insurance policy and the insurer can cap your participation rate.
• Variable Universal Life: VUL allows you to invest the cash value in grouped investments that are like mutual funds. You’ll receive a list of potential investments, along with their performance history and fees, and can choose how much of the cash value is invested in each. They have management fees that are typically higher than those for other universal life insurance policies.
• Guaranteed Universal Life: GUL is a universal life insurance policy that won’t lapse if the cash value is zero. It tends to behave like a Term life policy that could mature to up to 121yr. Cash value could be very little or none. Its coverage cost is the lowest out of all universal products and it’s the best way to get the lowest quotes for permanent coverage.