page loader

Universal Insurance

Universal Life Insurance

Universal life insurance is sometimes offered as part of a workplace benefits package. A person can also purchase this insurance independently. A universal insurance policy has cash value, in that any premium payment above the present cost of insurance is added to the policy’s cash value.

The policy is credited monthly by the insurance company with interest and premium payments. They subtract the current cost of insurance and any fees. This happens every month, until premium payments stop. At that point the policy still exists, but the cost of insurance and fees is taken from the amount of the policy.


Universal life insurance is useful for different reasons. It may or may not be a good choice. It is not as reliable as whole life insurance, but it has more longevity than term life insurance. One benefit is that the premium payments remain constant, which helps when people don’t want fluctuating premiums.

How It Works

The universal life insurance policy has a premium payment credited into the policyholder’s account each month. This is the money the policyholder pays to keep the policy active. The insurance company adds interest each month, while subtracting any fees they charge. If the policyholder makes premium payments each month, they will have a substantial sum after a few years.