Universal Life

Like whole life insurance, universal life offers both permanent insurance protection and a cash value element. With universal life, your premium is placed into an investment fund managed by the insurance company. Each month, the cost of a term insurance policy and the insurer’s administrative costs are deducted from that account.


  • Maximum flexibility: policyholders can vary the amount and timing of premium payments, and the amount of coverage.

  • Investment component earnings are tax-deferred.

  • Cash value: you can take out a loan against the policy or surrender it for cash.

  • The death benefit is not taxed.


  • The cash value of the policy and the size of the premiums are closely tied to prevailing interest rates, and may fluctuate according to the general financial climate.

  • Premiums can rise as you get older.

  • Because administrative costs are front-loaded, cash values build slowly during the initial policy years and you may lose much of your money if you surrender the policy within 3-5 years from time of purchase.

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