Universal Life Insurance
Universal Life Insurance is a type of permanent coverage that lasts your whole life, but it’s more flexible than whole life insurance. With this policy, you can adjust how much you pay in premiums and, in some cases, even change the death benefit. Part of your payment covers the insurance itself, while the rest goes into a cash value account that earns interest. Over time, you can use this cash value to help pay premiums or borrow from it if needed. Universal life is a good option if you want lifelong protection but also like the idea of being able to change your payments as your needs and finances change.
Costs You Can Expect from Universal Life Insurance
Universal Life Insurance usually costs more than term life but can be less expensive than whole life, depending on how the policy is structured. Premiums are flexible, meaning you can sometimes pay more to build cash value faster, or pay the minimum to just keep the coverage active. For example, a healthy 35-year-old might pay around $150–$250 per month for a $250,000 policy, though rates rise with age, health conditions, and desired coverage. Because underfunding can cause the policy to lapse, it’s important to plan premiums carefully.
A licensed life insurance agent can guide you through these costs by showing illustrations of how your payments and cash value may change over time. They can help you balance affordability with long-term growth, compare carriers, and ensure you don’t accidentally underfund the policy. An agent also helps you decide if Universal Life truly fits your financial goals or if another policy type might be better.
Pros and Cons of Universal Life Insurance
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Pros |
Cons |
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Flexible premiums – payments can be adjusted within limits |
More expensive than Term Life |
|
Adjustable death benefit to fit changing needs |
Requires monitoring to avoid underfunding |
|
Cash value growth with interest accumulation |
Growth depends on interest rates, which may be low |
|
Permanent coverage that lasts your entire life |
More complex than term or whole life |
|
Often more affordable than Whole Life for lifelong coverage |
Risk of policy lapse if not properly funded |
Who Universal Life Insurance Works Best For
Universal Life Insurance is best for people who want lifelong coverage but also value flexibility. It works well for individuals who may need to adjust their premium payments or death benefit as their financial situation changes over time. For example, it can be a good fit for business owners, families with changing income levels, or anyone who wants the option to build cash value they can borrow from in the future. It’s also useful for people interested in estate planning or leaving a lasting financial legacy, but who don’t want the higher fixed costs of whole life insurance. A licensed agent can help by explaining costs, customizing coverage, comparing options, and ensuring the policy fits your long-term goals.