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Universal life

Universal life insurance is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they fulfill any requirements of their policy to maintain coverage


Guaranteed universal life insurance

Lifetime protection

The policy is in effect from the first day, and UL could provide an income-tax-free death benefit to help provide for your family’s financial well-being. And as long as there is a positive cash value amount, the company can’t cancel your coverage.

Cash value

Like most permanent life insurance, it has a cash value that earns interest and grows over time. You can take out policy loans against the cash value, pay your premiums, or even use your coverage for cash for retirement to supplement your income.

Flexible premiums

UL lets you raise or lower your payments within certain limits as your circumstances change. While you may eventually have to pay higher premiums to keep your coverage, that flexibility can make it easier to keep your insurance policy in force if your earnings vary.

Tax advantages

UL lets you adjust your payments within certain limits as your circumstances change. While you may later have to pay higher premiums to keep your insurance protection, that flexibility can make it easier to keep your insurance policy in force if your earnings go up or down.

Universal life has freedom and flexibility, but there are fewer guarantees.

universal life insuranceThe premiums, cash value growth, and death benefit are guaranteed not to change in a whole life policy. With universal life, insurance carriers designed these things to be flexible. However, the more premium you pay affects cash value growth. And as you use to withdraw funds from the cash value, it will affect the amount your family will get when you’re gone. It’s possible the policy could lapse, so make sure to contact your financial professional to help make sure your policy is adequately funded, so it continues to meet your needs.

Checklist: Benefits of universal life insurance:  Is universal life insurance right for me?

What I want:

What I should get:

I want life-long protection

Whole or UL

I want to build tax-advantaged cash value

Whole or UL

I want access to policy cash while I’m alive

Whole or UL

I want the flexibility to raise or lower my premiums


I want affordable permanent coverage


I want guaranteed cash value growth

Whole life insurance

I want a guaranteed death benefit

Whole or term life

I want guaranteed level premiums

Whole or term life

I want the biggest death benefit per premium dollar

Term life insurance

There are two parts to every premium payment


The cost-of-insurance component

Universal life insurance cash value

The wealth-building component

The COI covers the cost of providing the death benefit and life insurance company administrative fees. It’s typically the minimum premium needed to keep the policy in effect, and the COI rises over time because it is based mainly on the policyholder’s age. 

Any premiums paid over the COI amount add to the policy’s cash value, subject to an upper limit set by the IRS. Different policies calculate cash growth in different ways. With Guardian, the minimum interest rate guarantee universal life insurance policy will never be lower than 2% annually – and it can go higher. 

Compare and buy life insurance

universal life insurance vs term

Universal life Insurance vs term   

UL insurance is a “hybrid” product of permanent life insurance and term life insurance. The most significant difference is that term life insurance will end after the prohibited period, after which the plan will not payout. With UL Insurance, there Is guaranteed to be a payout.

Since UL Insurance is guaranteed to payout, the premiums will be higher than term insurance.

Universal life insurance definition

universal life insurance meaningUniversal life insurance is a type of permanent life insurance. With a universal life policy, as long as the premiums are paid on time, the insured person will maintain coverage for their life. With many permanent life policies, universal life combines a savings component (called “cash value”) with lifelong protection. The insurance policy’s death benefit is paid out to the beneficiaries that you choose when you pass away.

Universal life vs whole life

What is the difference between whole life and universal life insuranc? Both are permanent types of life insurance.  Universal Life offers long-term protection.

universal life vs whole lifeYour premiums are fixed and guaranteed never to rise with your whole life insurance. If you continue to pay the premiums, you can count on the life insurance benefits being delivered to your beneficiaries. There are no fixed premiums with universal life, and you have more flexibility when you make premium payments. Although, if the policy is not adequately funded, it could lapse. Additionally, the premium cost of universal life insurance will increase significantly as you age. Take that into account once you decide which is better for you.

Whole life insurance offers more stability.

Whole life insurance has a guaranteed death benefit that will never decrease if the premiums are made. Your family will always get the amount you set your policy for at a minimum. There’s also potential for dividends to increase the amount of coverage over time. Your premiums will also never change. For many, this reliability is the most crucial part of this decision. 

Universal life insurance is more flexible.

Universal life insurance offers more control, but it requires oversight and doesn’t have a guaranteed death benefit. As your life changes, you can adjust your policy and even your premiums (within limits). Your policy can potentially end without adequately funding since the death benefit will not be guaranteed, although universal life often gives you the most long-term protection for your money.

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Indexed universal life insurance policy

Pros and cons of universal life insurance.  A index universal life insurance policy is a permanent contract that provides death benefits and investment elements. It allows you to invest in an index fund, such as the S&P 500, while providing a guaranteed minimum interest rate that helps your principal and cash value to accumulate tax-deferred over time.

What are the disadvantages of universal life insurance?

Some disadvantages of universal life insurance include higher premiums than term life insurance, complex policies that can be difficult to understand, and the potential for the procedure to lapse if the cash value is insufficient to cover the premiums. Additionally, the investment component of indexed universal life policies may perform better than expected, leading to lower returns.

Indexed universal life insurance pros and cons

A index universal life policy offers the potential for higher returns than traditional universal life insurance but also comes with higher fees and more complex policy structures. It may be a good option for those looking for a mix of life insurance and investment opportunities. Still, it’s important to carefully consider the pros and cons before deciding.

Variable universal life insurance

variable universal life insuranceVariable universal life insurance is a permanent life insurance policy with a cash value, investment sub-accounts, flexible premiums, and an adjustable death benefit.

Like many permanent policies, variable universal life insurance (VUL) offers life-long protection — it was designed to keep coverage in place as long as you live and sufficient premiums are paid.

Some of the main benefits of a variable universal life policy are a mix of those that are found in variable life and universal life policies:

Adjustable Premiums.

You may skip a payment or even stop paying your premium if your policy’s cash value can cover the costs. This is an excellent feature borrowed from universal life insurance, and it may be a great benefit if an emergency leaves you short of cash.

You have investment choices and risks.

As with a universal life policy, variable universal life lets you invest in underlying sub-accounts that offer various investment options. These investments will be tied to financial markets, and the value of your policy may fluctuate as the value of your chosen assets go up or down. While the rewards can be good, you’re also adding risks that may reduce your cash value. If the policy lapses by policy provisions, you could lose your death benefit.

With VUL policies, you choose several investment options for your policy’s sub-accounts. You will be able to decide to invest in a fixed interest account, which provides a guaranteed minimum interest. The value of your policy’s sub-accounts fluctuates based on how these investments perform. If they happen to do well, your policy’s value increases. If the investments decrease, your cash value will drop as well.

You can increase the death benefit.

If your insurance needs to change over time, you can increase or decrease your coverage. For instance, you might be able to request a death benefit increase or make a lump-sum premium payment to increase the policy’s cash value (though the IRS has limitations on how big that one-time payment can be).

You can withdraw or borrow from it.

Like other permanent life insurance options, a variable universal life policy allows you to withdraw funds or take out a loan against this cash value. The downside is that if you make a withdrawal or a loan, it can reduce your death benefits when you need them most or result in a hefty tax liability if you choose not to follow guidelines on repayment.


The big difference between variable universal life and universal life insurance policies is that VULs offer more investment options. You can select some different funds to create a portfolio essentially. Universal life policies do not submit this investment option, but you can choose a policy with the best features for your needs, such as getting a fixed interest rate or one with more risk that fluctuates with the stock market.


You are wondering if variable universal life insurance is right for you? It’s an excellent option for those seeking maximum flexibility, which also means you’ll want to be able to monitor your investment performance and decide where to allocate funds over time. It’s important to know that investing involves some risks that have the potential to reduce the policy’s cash value.

As with any decision about life insurance, it takes a bit of thought. It is so important to review your current circumstances and goals with someone like Coach B. Insurance, who can help you find the policy to suit your needs.

Universal life insurance company

universal life insurance companyBuying a life insurance policy is crucial to protect loved ones who rely on your income after your death. Plus, policies such as ones for universal life insurance offer a savings component, acting as an additional investment vehicle in your overall financial plan.

To help you decide which policy best fits your needs, we’ve researched and created a list of the top-rated universal life insurance companies based on financial strength, customer service, and policy offerings.

Our Best Universal Life Insurance Companies of 2022

#1  North American

#2  Northwestern Mutual

#3  Lincoln Financial

#4  John Hancock

#5  AIG

#6  Nassue Re

#7  Nationwide

#8  Banner Life

#9 Mutual of Omaha

#10 Prudential


#12 Transamerica

#13 Guardian Life

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Frequently Asked Questions

How Does Universal Life Insurance Work?

Universal life insurance is a type of permanent life insurance. Unlike term life insurance, which is meant for a specific period, such as 20 years, universal life insurance is in effect for the rest of your life (unless you stop making premium payments)

Is universal life insurance a good investment?

It depends on your financial situation and goals. Universal life insurance can offer both a death benefit and a savings component but also comes with high fees and risks. It's important to carefully consider your options and consult with a financial advisor before deciding.

How to buy universal life insurance

Universal life insurance can be a complex product, but with a little research and guidance, it can be a valuable addition to your financial plan. Here are some steps to follow when buying universal life insurance:
Determine your coverage needs and budget.
Shop around and compare policies from different insurers.
Understand the policy's features and benefits.
Work with a licensed insurance agent or financial advisor to make an informed decision.

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About Coach B.

After starting his financial career with Phoenix Home Life Insurance Company back in 1992, Scott decided he wanted to provide people with an easier and more enjoyable way to buy life insurance. That was the start of Coach B. Life Insurance, whose mission is to be transparent, honest, and helpful to customers — without ever bugging or pushing them.

In the years since then, he has worked tirelessly to improve the process of shopping for insurance. His goal is to make sure that everyone who comes to Coach B. — whether they end up buying a policy or not — has the best possible experience.

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