Universal life (UL) is permanent insurance with built-in flexibility. You can adjust your premium and your death benefit within limits as your life changes. Cash value grows at a declared interest rate.
Typical cost
$250-$500 / month for $500K at age 40. Premium can flex within carrier-defined limits.
Best for
- Buyers who want permanent coverage with premium flexibility
- Business owners with variable cash flow
- Estate planning at higher face amounts
How it works
- 01
You pay flexible premiums above a minimum.
- 02
Cash value grows at a current rate (with a floor) declared by the insurer.
- 03
You can adjust the death benefit up (with new underwriting) or down.
- 04
Monthly cost-of-insurance charges are deducted from cash value.
Pros
- • Premium and death-benefit flexibility
- • Permanent coverage
- • Cash value access via loans or withdrawals
Cons
- • Underfunding can cause the policy to lapse - illustration management is critical
- • Cost of insurance rises with age inside the policy
- • Requires annual review