Subscribe now

* Name:
* Email:

Close Message

Online Quote
Universal Life Insurance

Sometimes described as the most complex of the life insurance options, universal life insurance is a type of flexible permanent life insurance that offers a unique deal. It provides clients with the low-cost protection of term life insurance, and combines it with an additional savings element – as is the case with whole life insurance – which is invested to provide a cash value accumulation.

Investment Account

One feature about universal life policies that distinguishes them from the rest is that each of them has its own separate investment account. This account is where your monthly premiums will be paid to directly. Monthly premiums are basically derived from the life cover and the supplementary benefits you may require. The concept of an investment account enables the policy holder to accumulate cash in a savings capacity.

At the start of each new month a calculation will be made to establish how much money is available in the investment account. Then, the insurer will deduct this figure from the amount of life cover and supplementary benefits. Cover will then be provided according to the balance in the account.

The other point of having an investment account is that eventually your universal life policy will reach what is known as a “breakthrough point”, which is when your investment account outweighs the life cover you require. At this point, you will no longer need to purchase life insurance and your entire monthly premium will remain and grow in your investment account – a handy benefit.


Universal life is undoubtedly more flexible when compared to other kinds of life insurance policies. First off, with universal cover the policy owner is allowed to shift money between the insurance and savings components of the policy. Another perk is that if the policyholder’s circumstances happen to change while the policy is still active, the death benefit, savings element, and premiums can be reviewed and altered if necessary.

Cash Value

The feature that distinguishes this policy from its whole life counterpart is that the premiums, cash values, and level amount of protection can each be adjusted up or down during the policy duration. Cash values are useful because they earn a periodically-set interest rate as decided by the insurance company, which generally doesn’t drop below a certain level.

As stated above, the premiums attached to such a scheme are variable and broken down into insurance and savings, allowing the convenience of making adjustments where needed. Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable rate that is adjusted monthly.

Universal Vs Term Life

From an unbiased perspective, term life is more appropriate for the average person looking to insure themselves against unexpected events. However, this doesn’t necessarily mean that term life is better for everyone – individual circumstances play a major role in the type of life insurance that is required. Thus universal life cover may appeal to individuals looking for the tax advantages associated with cash-value plans, as well as people that start families later in life and need insurance to protect their loved ones. In these cases, term life would be less suitable.

  • Like whole life, universal life is also a permanent policy providing cash value benefits based on current interest rates.
  • It offers the policy holder the right to borrow or withdraw from the policy during their lifetime.
  • As your investment account increases, the amount needed to maintain your desired life cover will decrease.
  • The policy allows the policyholder to use the interest from their accumulated savings to help pay premiums.
  • It grants you the convenience of premium and face amount flexibility.