Universal life is permanent life insurance with a cash value account and flexible payments. You can change how much you pay and how big the death benefit is, within limits.
Who it fits
People who want lifelong coverage, some savings, and the freedom to change their payments over time.
- Who buys it
- Ages 18 to 80
- Medical exam
- SometimesDepends on age, amount and company
- Ages
- Texas says universal life stays in effect until the maturity date, usually age 95 or 100, as long as there is cash value.
What to know before you buy
You can raise, lower, or skip premiums. But changes can affect how long your coverage lasts.
The cost of insurance is not locked in. It rises each year, and it comes out of your cash value.
If your payments and interest do not cover the costs, your cash value drops. If it reaches zero, the policy can end.
The company sends a report each year. It shows your cash value and how long the policy may last.
Some policies have a no lapse guarantee. It keeps coverage going if you pay the set premium on time.
Indexed universal life ties interest to an index. Variable universal life puts money in investment accounts that can lose value.
Common questions
Can I skip a payment?
Often yes, but the cost comes out of your cash value. If it runs out, the policy can lapse.
Is the interest rate guaranteed?
Texas says most universal life policies earn a guaranteed minimum rate. Variable universal life does not, because it depends on investments.
What happens at the maturity date?
Texas says coverage ends and you get the cash value.
Can I borrow from it?
Florida says most universal life policies allow loans and withdrawals. Unpaid loans lower the death benefit.
