What Is A Universal Life Insurance policy?

From companies to rates to how it works, know everything about universal life insurance policy.

Life insurance policies aren’t as complicated as they’re perceived to be. There are a couple of mainstream insurance policies that are the basic ones and are modified to the extent that they give birth to more plans.

Universal life insurance policy is somewhat an extension of the whole life insurance policy. Let’s see how.

A whole life insurance policy gives policyholders lifetime coverage and a guaranteed death benefit to beneficiaries. Along with the death benefit, there is a cash value component that grows over time. This cash value can be borrowed or withdrawn during the policyholder’s life, so if there is a significant expense like paying for weddings or sending a kid to college, it can be covered.

Universal Life Insurance Definition

A universal life insurance policy is almost the same but has an added component: cost of insurance. These are the basic premiums that the insured has to be to keep the policy in force. A universal life policy can be cashed out at any point in time as the policy matures; this cash value is also known as the savings component. The cash value account accumulates over time, depending upon the interest rate and current market trends.

How does Universal Life Insurance work?

Universal life insurance is flexible and cheaper in terms of premiums because it is low, and the death benefit is also adjustable.

Withdrawing the cash value to use during the policyholder’s life is still a better option than surrendering the policy if you don’t need it anymore. A surrender fee may be charged if you abandon the policy, and you will not receive coverage anymore, so it is better to use all the cash if you’re planning on not using the policy anymore.

Does this policy work for you? Let’s look at the advantages and disadvantages of a universal life insurance policy.

Pros and Cons of Universal Life Insurance


  • Flexible in nature
  • Cash value grows overtime on an interest rate.
  • More opportunity to increase cash value
  • Lower premiums
  • You can also skip some premium payments if you can’t afford to pay in a month.


  • No guaranteed level premium
  • The interest could be low while building cash value.
  • You can’t only use the cash value to build premiums.
  • Low performing investment can reduce the cash value.

The best way to weigh the pros and cons of universal life insurance is to have an expert agent on your case and to make sure they tell you how each option plays in your case.

What happens when a Universal Life Insurance Policy Matures?

Typically, when a universal life insurance policy matures, the payment is given to the policyholder or their beneficiaries if they die, and naturally, the coverage ends. The policy’s maturity date is naturally going to be what you decide when you sign the plan, but usually, it depends on the age of the policyholder- generally after 85 years old.

When the policy matures, the insurance company issues a check to the policyholder if they outlive the maturity date. The payment is usually the death benefit or the cash value amount.

Universal Life Insurance Companies

The best companies rated in 2020 for universal life insurance are as follows:

All of these companies have been handpicked as the best companies with suitable universal life insurance plans for all customers. As a policyholder, you need to research and compare these companies online to choose the best one.

Universal Life Insurance Calculator

To find your return on the universal life policy, you must run an estimate on online insurance calculators. These will give you a rough idea of what you should be expecting while buying a policy.

The highest rating calculator online for 2020 is from Allstate. You are only required to fill in relevant information like your current age, and federal tax. The calculator will run the data through its algorithm to provide an estimate of the insurance cost and premiums.

Universal Life Insurance Quotes

For every State and every company, the quotes might differ.

These are average quotes extracted online. Assuming you’re a healthy individual looking for a universal life insurance coverage of up to $250,000, this is what the math will look like for you.

Age Male Female
25-35 $63 – $103 $54 – $83
35-45 $103 – $150 $83 – $130


45-55  $150 – $244   $130 – $207
55-65 $244 – $427   $207 – $337

This is just an estimate of average quotes; for a better rate, you should run your information through online calculators to see if the quotes suit you enough to consider buying the policy.


Even though universal life insurance policy is a little more complicated than mainstream whole life insurance, it allows policyholders with more benefits and flexibility. Choosing particular premium options and building cash value is enough for people to lure them for universal life insurance.

But for every customer, universal life insurance may not work. There are different pros and cons to each policy, and you have to scrutinize to see which one works best for you carefully. The best way to do so is to have an insurance agent on your back and have transparency in the process.

Tell them exactly what you need, what coverage you want, what premiums you can afford, and your end goal with the policy. This way, the insurance agent will curate the best-customized strategy for you to suit your insurance needs. And when that’s done, be sure to pay your premiums on time to keep the policy in force and enjoy the benefits!

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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