Universal Life Insurance

What Does Universal Life Insurance Mean?

Universal life insurance is a type of permanent life insurance that includes a savings component and offers flexibility in its terms. Unlike a whole life policy, it allows the policyholder to adjust the premiums, death benefits, and cash value as their circumstances change. Additionally, the interest accrued from the cash value can be applied toward premium payments.

Insuranceopedia Explains Universal Life Insurance

Universal life insurance, an alternative to whole life insurance, provides policyholders with flexibility in allocating their funds. For example, a policyholder may choose to apply the cash in the savings component toward the premium if returns are low. Due to the variability of interest rates and the resulting cash value growth, it is essential to monitor the policy’s performance closely; otherwise, the insured may face lower returns and higher-than-expected payments to maintain coverage.