Universal Life Insurance
Flexible permanent coverage with adjustable premiums.
Universal life insurance is permanent coverage with more flexibility than whole life. You can adjust your premiums and death benefit as your needs change. It's more complex, and that complexity isn't right for everyone.
Flexible Premiums
Pay more when you can, less when you need to. As long as there's enough cash value to cover costs, the policy stays in force.
Adjustable Death Benefit
Increase or decrease your coverage as your needs change. Subject to underwriting if you increase.
Cash Value Growth
Cash value grows based on interest rates or market performance, depending on the type of universal life.
Permanent Coverage
Like whole life, universal life can last your entire life if properly funded.
Types
Three main varieties.
Traditional Universal Life
Cash value earns a fixed interest rate set by the insurer. Rates can change over time, but there's usually a guaranteed minimum (often around 2-3%). The most straightforward type.
Indexed Universal Life (IUL)
Cash value growth is tied to a stock market index (like the S&P 500). You get some upside potential with a floor protecting you from losses. More complex, often with caps on gains.
Variable Universal Life (VUL)
Cash value is invested directly in sub-accounts similar to mutual funds. Higher growth potential but also real risk of loss. The most complex and riskiest type.
Drew's Perspective
Universal life requires more active management than most people expect. The flexibility can be valuable, but it also means the policy can lapse if not properly funded over time.
If you want permanent coverage, whole life is simpler and more predictable. If you just need coverage while raising a family, term life is far more affordable. Drew can help you determine which type fits your situation.
Who It's For
People who want flexibility and understand the trade-offs.
Universal life appeals to people with variable income, those who want to adjust coverage over time, or those interested in the cash value growth potential. It requires more attention than whole life.
Universal life may fit if you
- ✓ Have variable income and want premium flexibility
- ✓ Want permanent coverage but may need to adjust it
- ✓ Are interested in market-linked cash value growth (IUL)
- ✓ Will actively monitor and manage the policy
Common Questions
About universal life insurance.
Can a universal life policy lapse?
Yes. Unlike whole life, universal life can lapse if your cash value runs out and you can't cover the cost of insurance. This can happen if you underfund premiums, if interest rates drop below projections, or if you take too many loans against the policy. This is why universal life requires more active management.
What's the difference between IUL and VUL?
Indexed Universal Life (IUL) ties your cash value growth to a market index but with a floor (often 0%) protecting you from losses. Variable Universal Life (VUL) invests directly in sub-accounts like mutual funds, with no floor. VUL has higher upside potential but also real downside risk. IUL is complex; VUL is even more so.
How do I know if my policy is properly funded?
Review your annual statement, which shows projected values under different scenarios. Look at the guaranteed column, where carriers promise what they'll deliver. If your cash value is trending lower than projected, you may need to increase premiums. Many policies lapse because owners don't review them regularly.
Have a Health Condition?
I specialize in placing hard cases.
Guides for people with specific conditions, explaining what carriers look for and how I approach each case.
Let's figure out what fits.
Universal life isn't for everyone. I'll help you understand whether it makes sense for your situation.