Insurance
Universal Life Insurance
Universal life (UL) is permanent coverage with flexible premiums and an adjustable death benefit. Cash value typically earns a credited interest rate.
How it works
Premiums are flexible within limits set by the policy. Cost-of-insurance charges and fees are deducted from cash value monthly; remaining cash value earns interest at a credited rate, often with a guaranteed minimum.
Common variations
- Standard UL — credited interest based on insurer's declared rate.
- Indexed UL (IUL) — credited interest tied to an index (with caps and floors).
- Guaranteed UL (GUL) — death benefit guaranteed for life if minimum premium is paid; minimal cash value.
Pros and trade-offs
- Premium and death-benefit flexibility can adapt to changing needs.
- Underfunding can cause the policy to lapse later in life — illustrations are not guarantees.
- More moving parts than whole life; statements should be reviewed annually.
Who it tends to fit
- Buyers wanting permanent coverage with premium flexibility.
- Estate planning needs where structure can adjust over time.
- Those comfortable monitoring an in-force policy and adjusting funding as needed.
What happens if I underpay?
Cash value covers shortfalls until depleted. If cash value runs out, the policy can lapse — sometimes decades after purchase.
Are illustrations guaranteed?
Only the guaranteed columns are guaranteed. Non-guaranteed columns assume sustained credited rates that may not hold.
How is IUL different from variable life?
IUL credits interest based on an index with caps/floors — your cash value isn't directly invested. Variable life invests cash value in sub-accounts that can lose value.
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