Universal Life Insurance
Definition - What does Universal Life Insurance mean?
Universal life insurance is type of permanent life insurance that features a savings element and flexibility in the terms. Unlike a whole life policy, it allows a policyholder to alter the premiums, death benefit, and cash value as their situation changes. Moreover, the interest accrued from the cash value can be applied toward premium payments.
Insuranceopedia explains Universal Life Insurance
An alternative to whole life insurance, universal life insurance affords policyholders flexibility in where their money goes. For instance, a policyholder may decide the cash in the savings would better serve as external funds to go toward the premium due to a low return. Therefore, because of the variability of the interest and subsequent cash value growth, it is necessary to carefully monitor the policy's performance, or the insured risks receiving lower returns and paying more than expected to continue their coverage.