What Is Universal Life Insurance?

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  • Universal life insurance is a type of permanent life insurance. Find out more details about universal life insurance in this article from HelpAdvisor.

Universal life insurance is a type of permanent life insurance, which refers to life insurance policies that do not expire. Universal life insurance is sometimes abbreviated UL. Universal life insurance typically includes a death benefit and a savings account element.

Many UL policies also have flexible premiums options. Some require a single premium payment in a lump sum, and others have scheduled fixed premiums. UL premiums are typically lower compared to other types of life insurance.

One reason people enroll in UL insurance is for the flexibility — policyholders are allowed to adjust the death benefit and sometimes the premiums, too.

UL Insurance Premiums

Premiums for universal life insurance consist of two components: a cost of insurance (COI) portion and a savings component, known as the cash value.

  • Cost of Insurance (COI): This is the minimum premium payment required to keep the policy active. The exact amount varies depending on the policyholder's age, insurability and risk factors.
  • Cash value: This accumulates over time based on the current market or the minimum interest rate for the policy, whichever one is greater. As this amount grows, policyholders can access the funds without compromising the value of the death benefit. But when withdrawals are made on the policy, taxes must be paid as well because this counts as income.


One major benefit to UL insurance policies is flexible premiums. Whole life insurance policies have fixed premiums over the life of the policy, but the premiums for UL policies are flexible.

For example, policyholders can pay in excess of the COI, and the leftover amount is added to the cash value, which then accumulates interest. If there's enough cash value accumulated, policyholders can skip premium payments, as long as there's enough cash value to cover them.

Consult the Services of a Professional

If you have questions about what specific life insurance policy might work best for you, consult with an insurance professional who can help you sort out your options.