What Is a Universal Life Insurance Policy

Universal life insurance is a permanent type of life insurance that gives you two things in one policy:

1. A death benefit – money paid to your beneficiaries when you pass away. 
2. A cash value account – savings that can grow over time.
    

As long as you keep paying your premiums, your coverage lasts for your entire life.

While whole life insurance also offers lifetime coverage and cash value, universal life insurance is more flexible. You can:

• Change your premium payment schedule 
• Adjust how much you pay 
• Increase or decrease your death benefit (within policy limits)
   

The cash value is invested, which means it can grow – or in some cases decline – depending on market performance.

• Some policies earn interest at a fixed money market rate. 
• Others tie your interest rate to a market index (like the S&P 500).
   

You can use your cash value to:

• Help pay your premiums
• Take out a policy loan 
• Withdraw funds for expenses 

Important: Using your cash value will reduce your death benefit, and withdrawing too much could cause your policy to lapse.

Your cash value growth is linked to the performance of an index, such as the S&P 500. Returns may be capped, but you can sometimes choose a fixed interest option instead.

Offers a guaranteed death benefit and fixed premiums. Often called “no-lapse” coverage, but the policy typically has an end date you select (for example, age 100). GUL usually has little to no cash value.

1. You pay premiums – either monthly or annually, and you can adjust the amount and frequency. 
2. Part of your premium goes to the death benefit, part goes to the cash value. 
3. Cash value can grow – but growth depends on the policy type and investment performance. 
4. You can borrow or withdraw from the cash value, but it may affect your coverage. 
5. When you pass away, your beneficiaries receive the death benefit (minus any unpaid loans).
    

• Lifetime coverage (as long as premiums are paid) 
• Flexible premiums and death benefits 
• Potential for cash value growth