Universal life is permanent life insurance that can serve needs just as whole life has done for so long. However, the flexibility of universal life adds a new dimension to fitting the coverage to the changing needs of the insured. On a personal note I am not a big advocate of universal life due to my own experience when I knew little about insurance. Basically I got burned. I’m not saying you will but do your due diligence. Mostly my problem was with the way the policy was set up. My premiums shot up after a certain age if I were to continue plus I had to pay some extra up front. I prefer to keep it simple and just buy some whole life. I will say though that Universal life can outperform Whole life and has more options. Ultimately your choice of course.

Universal life has an investment feature and separates the protection, savings and expense components. The policy has a guaranteed minimum interest rate and cash values. The policy also provides for the crediting of excess interest based on a higher current market rate but may not always perform as expected. It can however provide the flexibility to deal with by using current interest rates. It also allows you to alter the benefit and premium amounts but if you choose to increase coverage you may have to provide evidence of insurability.

So basically with this type of policy you can change the following in any or all of the following ways:

Increase or decrease the amount of protection

Increase, decrease or stop premium payments

Pay in extra for increased buildup of tax deferred cash value

Partial cash withdrawals