Universal Life Insurance

Universal life insurance is a type of permanent life insurance that combines lifelong coverage with flexible premiums and a tax-deferred savings component. It's designed for people who want more control over how their policy works, such as how much they pay and how their cash value grows. Each premium payment is split into two parts:

• Cost of Insurance (COI): This covers the actual life insurance portion, including mortality charges, administrative fees and other costs that keep the death benefit active.
• Cash Value Component: The remaining amount goes into a cash value account, which earns interest based on the insurer's investment strategy, typically using stable vehicles like bonds. Over time, this account can grow, and you may be able to borrow against it or make withdrawals, depending on your policy's terms.

Universal life policies are often chosen by people who want long-term protection with the flexibility to adjust premiums, death benefits and investment options over time.

Universal life insurance stands out from other forms of permanent life insurance due to its flexibility and investment potential. Here are the core features that set it apart:

Universal life insurance offers a mix of coverage and investment flexibility. Its adjustable structure makes it appealing for people who want more control over their life insurance as their financial situation evolves.

Universal life insurance offers more flexibility than whole life, with the potential for higher returns, but that flexibility also introduces risk. Here's how it stacks up.

Universal life insurance can be a smart option for those who want lifelong coverage with flexibility in premiums and potential investment growth. But it requires regular monitoring to avoid policy lapse, unless it includes a no-lapse guarantee. Here are the types of buyers who may benefit most from this kind of policy:

When comparing universal life insurance vs. term life, the main difference is flexibility and duration. Term life provides affordable, time-limited coverage, while universal life offers lifetime protection with investment potential.

Term life insurance works well for people who need coverage for a set period and want to keep costs low. Universal life may be better suited for those looking for permanent protection, flexible premiums, and the potential to build cash value over time — as long as they're comfortable managing a more complex policy.

Whole life and universal life are both types of permanent life insurance, meaning they offer lifelong coverage and a cash value component. But they differ significantly in flexibility, investment options and cost structure.

Universal life works well for people who want long-term coverage with flexibility, especially those comfortable managing investment risk and using life insurance as part of a broader financial strategy. Whole life may be better for those who value predictability, want guaranteed growth, and prefer a policy they don’t have to actively manage.

Universal life insurance comes in several variations, each offering different levels of flexibility, risk and guarantees. The right choice depends on your financial goals, investment knowledge and how much oversight you're willing to maintain.

Universal life insurance typically costs more than term life (and often more than whole life) because it combines lifelong coverage with an investment component. But unlike whole life, your premiums are flexible and can change over time based on how your policy performs. The cost of a universal life policy is influenced by several personal and policy-level factors:

Universal life lets you invest your policy’s cash value and potentially use it to pay premiums, but if that value underperforms, you'll need to cover the shortfall. Missed payments or poor policy management can lead to higher costs or even a lapse in coverage.

Before buying, weigh your financial goals, risk tolerance and how involved you want to be in managing your policy. Universal life offers long-term flexibility, but that flexibility comes at a price. It also often requires more hands-on oversight than other types of life insurance.

Enhancing a universal life insurance policy with riders can provide additional security and flexibility to meet changing life circumstances. Riders allow you to customize your policy, offering benefits that can be pivotal during unforeseen events. Here are some common riders available for universal life insurance:

• Accelerated Death Benefit Rider: This rider allows early access to part of the universal life insurance death benefit if the policyholder is diagnosed with a terminal illness, providing financial relief when needed.
• Waiver of Premium Rider: Should you become disabled and unable to work, this rider waives the universal life insurance premiums, ensuring your coverage continues without financial strain.
• Guaranteed Insurability Rider: This rider offers the option to purchase additional insurance at certain intervals without further medical examination, securing your ability to increase coverage as life changes.
• Child Term Rider: This coverage adds temporary life insurance for your children on your policy. This can be converted into a permanent policy for them in the future without the need for a medical exam.
• Long-Term Care Rider: If the policyholder requires long-term care, this rider allows access to the death benefit to cover these costs, which can help effectively manage the universal life insurance cost during difficult times.

Each rider adds a layer of protection and flexibility, making universal life insurance policies a comprehensive tool for long-term financial planning.

In this page, we explained how universal life insurance combines permanent coverage with flexible premiums and an investment component. It gives policyholders more control than whole life but also introduces more complexity and risk.

This type of policy may work well if you want long-term protection and are comfortable managing cash value performance over time. Before buying, make sure the potential benefits align with your financial goals and your willingness to monitor and adjust your policy as needed.

Before choosing a life insurance policy, consider which plan best suits your needs and financial goals. Check out the following common questions people have about universal life insurance to help you make the best choice.

To help readers understand the cost and value of universal life insurance, MoneyGeek used a consistent, data-backed approach across multiple insurers and policy types.

Why You Can Trust MoneyGeek? We gathered and reviewed over 1,400 life insurance quotes and policy details using a standardized evaluation system. Our scoring incorporated both pricing and product features to identify insurers that offer flexibility, financial strength and broad consumer value.

Data Recency

All pricing, product information and company data were last updated in 2025.

How We Rated Universal Life Insurance Companies

We used a five-part scoring model to evaluate universal life insurance providers. Each company received up to five points per category, resulting in a final MoneyGeek score out of 100.

Scoring Categories for Universal Life Insurance:

• Financial Stability: 30%
• Customer Satisfaction: 25%
• Buying Process: 20%
• Product Diversity: 15%
• Affordability: 10%

What Our Scores Include:

• Quote data for various universal life products
• AM Best ratings and insurer longevity
• Complaint data from the National Association of Insurance Commissioners (2020–2022)
• Online application and policy management features
• Availability of product types, including traditional UL, IUL, VUL and no-lapse guaranteed UL

Sample Customer Profile Used for Quotes

We collected quotes using a default profile of a 40-year-old male, nonsmoker, in excellent health, 5'11", 175 lbs. We also adjusted quotes by age, gender, health rating and coverage amount to reflect different consumer needs.

How We Handled the Data

We analyzed pricing trends and policy structures across the data set to surface the most competitive and reliable offerings. While actual quotes will vary by individual, our process reflects real-world pricing patterns and product differences.