What is Universal Life Insurance?

Are you looking for life insurance to protect your family and ensure their financial security even in the most difficult circumstances? There are several life insurance options available for you, one of which is universal life insurance. 

What is universal life insurance?

Simply put, universal life insurance is permanent life insurance. This means that the coverage builds an actual cash value and it lasts for a lifetime so long as you pay the premium. It allows for more flexibility as you can increase or decrease your premium payments within the specified limits. The payout for universal life insurance is called the death benefit and is given to beneficiaries without tax. It combines cash value with lifetime security. This means that a portion of your premium payment is put to your death benefits while the rest goes to your other financial plans. You can use the cash value as well while you’re still alive. You can use it to pay for your strategy premiums, withdraw your cash, or you can loan against it and pay it back with interest. 

Benefits of universal life insurance

There are several benefits to getting universal life insurance. This kind of policy offers lifetime protection, which means it does not have an expiration date so it will financially protect your beneficiaries as long as you keep a good record. The earlier you get universal life insurance, the more affordable it will be. Once you get the policy, you’re already covered for life, and regardless of your health condition, the benefit paid to your beneficiary stays the same and will always be tax-free. 


Unlike other policies, universal life insurance doesn’t have a fixed payment. You are allowed to raise or lower the payment depending on your financial capability. However, you need to remember that decreasing the payment means paying more later on. Another advantage is the expanded cash value options. Your insurance isn’t just a death benefit, you can also see it as an investment and put it to the stock market.  


Other insurance companies allow their policyholders to change the amount paid to the beneficiaries upon their death. But this is only true for policyholders who pass the medical exam. 

How does it work?

There are two segments in universal life insurance – the cost of insurance (COI) and the cash value. The COI is the cost of the death benefit and the administrative fees. It’s also the minimum premium cost that you need to keep so that the policy stays in effect. The cost can either rise or fall depending on certain variables such as the policyholder’s age. Cash value, on the other hand, is your investment gain. You can also withdraw or get a loan from your cash value. 


Universal life insurance is like hitting two birds with one stone. You get the benefits of the typical health and life coverage and at the same time, you’re making a cash value investment as well. While it’s often compared with whole life insurance, this policy is more flexible and affordable. If you’re wondering if this policy fits your needs, you can call one of our expert and professional insurance agents. They are more than willing to get back to you and answer all of your questions.