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Universal Life Insurance

"Destiny is no matter of chance. It is a matter of choice." —William Jennings Bryan

Choice is what makes universal life insurance different from whole life insurance.  They both cover you for your entire life, and they both contain a cash value account attached to your policy, but there’s one very important difference:  you. With this policy, you control what you pay and when.   

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Here's what universal life insurance offers:

  • Protection throughout your life
  • Cash value account that accrues interest
  • Ability to withdraw or borrow against your cash value
  • Ability to pay into the policy as much or as little as you want, on your own payment schedule. For example, if you have a kid going to college, an elderly parent needing care, or unfortunate midlife crisis purchase of a slightly used 2007 Weber supercar, you can adjust your payment schedule. 

Trusted Quote lets you search through the nation's top universal life insurance providers instantly, with no obligation to buy. If you have questions, you can use our Live Chat feature or pick up the phone and call us at 800-823-4852. With one click, you'll have the best rates from the most prestigious carriers at your fingertips!

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What is universal life insurance?

Here is a very basic definition to get you started:

Trusted Quote Universal life insurance pays an agreed-upon amount of money to a person’s beneficiaries when he or she passes away. The policy also contains a cash value account that can be used for investment purposes, and allows the policy owner to change the payment schedule and payment amounts.

This type of policy gives you permanent coverage, unlike term life insurance.

Unlike whole life insurance (the other type of permanent life insurance), it allows you to make payments on your schedule. You choose how much and when to pay. All you need to do is make sure there's enough in the account to cover the periodic account maintenance fees charged by most carriers. If the William Jennings Bryan quote above makes you feel like the world is your oyster, this may be the right kind of policy for you. If it makes you feel like you need an antacid tablet, you may want to think about a type of policy less dependent on you to monitor and make choices.

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Who should buy this type of policy?

This type of policy works for a range of individuals and families.

  • Married with children? Protect all of them after you pass away.
  • Young and single? Build up your cash value account and use it to supplement your retirement income later in life.
  • Retired? Fund your policy with a pension or cashed-out 401(k) and start reaping the benefits immediately.

What parts of the policy do I have control over?

Dictionary page showing definition of the word 'choice'
Universal life insurance gives you major control over your policy.

Not only do you control the payment schedule and payment amounts, but you control the way those payments get split up.  Your universal life insurance policy has two components: the insurance portion and the cash value portion. 

The insurance portion is what funds the death benefit—the amount of money your beneficiaries will be paid when you die.  The cash value portion is like an enforced savings account.   You get to choose how much of your monthly payment funds each part.

Build up the insurance portion if you’re really concerned about your family’s financial security, or build up the cash value portion if you’re looking for a future source of money to draw from in your own lifetime.  (Bonus!  Once your cash value account has enough money, you can use it to make your monthly payments.)


How much does it cost?

As you’ve probably guessed, universal life insurance is more expensive than term life insurance.  Because you’re in charge, the insurance company has to invest the money in your cash account as you instruct. To do this, they need to have knowledgeable staff and access to investment vehicles.  This costs them money, so you can expect them to charge you a little more for this privilege.  

However, a universal policy is cheaper than a whole life insurance policy for the exact same reason. Think of it as outsourcing—the insurer is outsourcing the investment to you. It’s your job to monitor it, track payments, make decisions, etc. While they need to maintain the staff to carry out your wishes, they don’t have to pay a think tank to make smart investing decisions.  (Those guys—the suit guys—probably work in the whole life insurance department.)  

Periodically, your insurer will deduct small fees from your cash value account to cover the cost of administration. It’s up to you to make sure there’s enough money in the account to cover the cost of these fees.  You’ll see each expense itemized as it hits your account so you can keep track. In contrast, you won’t get an itemized list of expenses associated with your whole life insurance cash value account.  The insurer manages that account for you and won’t report what makes up their administrative costs. 

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How do I manage my universal life policy?

These policies are a bit more complicated than a simple term life policy.  To make sure you have a good idea of what your responsibilities are, let’s make a list. 

What You Must Do

  • Go over payment guidelines with your insurance agent. He or she will suggest how much you might pay each month and show you how that amount will help your account grow.
  • Make one initial monthly payment to get the account started.

And After That?

  • Create a plan for how and when to pay into your account.
  • Pay only on days that end in "y."
  • Increase or decrease your death benefit amount as you see fit.
    • Be aware that you may need to take another medical exam to do this.

What if I want even more control over my policy?

Senior man and women sitting with a laptop
Variable universal life lets you invest your money.

One interesting policy variation is called variable universal life.  Think of it as a Cirque du Soleil contortionist—it doesn’t get any more flexible than this. 

You can control your:

  • Monthly payment amount
  • Death benefit amount
  • Investment choices for your cash value account

Because you have the ability to control where your money is invested, you also have a bit of risk to manage.  Your death benefit amount will decrease if your investments do poorly, or it may rise if your investments do well. Many policies help you tolerate this risk by offering a guarantee that your death benefit won’t drop below a particular point.  

Because of the risk involved with a variable universal policy, it’s regulated by both the Securities and Exchange Commission and your state’s insurance commissioner. This probably won’t affect the day-to-day workings of your policy, but it’s good to know. (Because knowing is half the battle.)


Am I allowed to pull out my cash value?

Yes, universal life insurance gives you the ability to borrow against the cash value of your policy.  (If you’re keeping score, whole life insurance also offers this benefit, but term life does not.) 

If it’s been a few years and your cash value has grown, you can borrow against that money to do…well, pretty much anything you want.  You don’t have to jump through hoops to get it, either.  There are no credit checks and no scrutiny of your bank records. If you routinely walk into fast-food restaurants without shoes or a shirt, you can still borrow against your life insurance’s cash value.  We don’t judge.

Bonus: The interest rates for this type of borrowing are significantly lower than what you’d get from a bank or a credit card company. If you don’t repay the loan, your insurer will just use the money in your cash value account to cover the amount you borrowed.    


I like it! How do I get started?

  • Get a free quote just by clicking the big orange button below.
  • Call us at 800-823-4852 and we’ll answer your questions, plus help you through the process step-by-step. Call us Monday through Friday, 8 am to 5 pm, Pacific time.

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For over 40 years, our company has helped half a million American families protect their future with life insurance. We provide fast, free quotes for life, disability, long-term care insurance, and more.

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*Comparison of each carrier’s best published rates for a
10-year level term policy, 30-year-old non-smoking female


^Represents 10-year level term life insurance rates for 40-year-old female,
in good health, no tobacco, residing in Ohio.

R. Jan Pinney CLU, ChFC is a licensed life insurance agent in all states and the District of Columbia. The following agent license numbers are provided for R. Jan Pinney as required by state law: CA agent #0440057, LA agent #291116, MA agent #1674866, MN agent #20270113, UT agent #58330, agent R. Jan Pinney, DBA Pinney Insurance Services. Commercial use by others is prohibited by law. This site provides term quotes. Each rate is a quote based on information provided by the carrier. No portion of Trusted Quote may be copied, published, faxed, mailed or distributed in any manner for any purpose without prior written authorization of the owner.

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