What Is Universal Life Insurance

Universal life insurance is a type of permanent life insurance that offers flexible premiums, a savings component, and a death benefit. It differs from other types of life insurance policies in that it allows policyholders to adjust their premiums and death benefits over time, based on their changing needs and financial circumstances.

With universal life insurance, policyholders can allocate their premiums to cover the cost of insurance and to build a cash value component that earns interest over time. The cash value can be used to pay premiums, borrow against, or withdraw from the policy. The death benefit is paid out to the policy’s beneficiaries upon the insured’s death, and can be structured to be level, increasing, or decreasing based on the policyholder’s preferences.

Universal life insurance can be a useful tool for estate planning, business succession planning, and providing a source of tax-free income in retirement. However, it is important to carefully review the policy’s terms and fees, as well as the financial strength and reputation of the insurance company before purchasing a universal life insurance policy.