Ask an Agent: What Is Universal Life Insurance?

Universal life insurance is a type of life insurance coverage offering lifelong protection. It comes with flexible premiums and a death benefit payout, along with a tax-deferred cash value that policyholders can eventually borrow against. 

We asked AAA Northeast insurance agents Jeffrey Bechtold and Candice Burroughs what universal life insurance covers, how to purchase a policy and what insurance agents wish their customers knew about universal life insurance policies. Here’s what they had to say. 

Get a universal life insurance policy with AAA.

What Is a Universal Life Insurance Policy? 

Universal life insurance is a permanent life insurance policy. It lasts for the duration of the policyholder’s life, as long as they fulfill their obligations to maintain their coverage.

Unlike whole life insurance, universal life insurance gives policyholders the flexibility to adjust their premiums and the value of their death benefit for the duration of their policy. 

It also comes with a built-in cash value that accumulates interest over time. 

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What Coverage Does Universal Life Insurance Include? 

A universal life insurance policy offers more than just a death benefit, according to Bechtold.

“Universal life insurance gives you lifelong coverage starting at $100,000 and going up into millions, paying that amount to your loved ones when you pass away. In addition, universal life insurance includes a cash value feature that can grow inside the policy. Over time, that cash value can build up as you make payments,” he said. 

“You may be able to use it in the future for things like supplementing income or helping pay premiums, while still keeping your coverage in place.”

What’s One Thing You Wish Customers Knew About Universal Life Insurance? 

“I wish policyholders knew about how much flexibility universal life insurance gives you over time,” Bechtold said. “You get lifelong protection, the potential to build cash value you can tap into and the ability to adjust premiums or coverage as your life and goals change.” 

Who Is Universal Life Insurance Best for? 

• People looking for lifetime coverage. If you’re looking for coverage that lasts your whole life and pays out a death benefit to your family, universal life insurance might be the right choice.
• Customers who value flexibility. Universal life insurance offers a unique opportunity to adjust premiums and death benefits for clients who need extra flexibility.
• Those with long-term savings goals. If you want to build long-term savings combined with a death benefit, a universal life insurance policy might be right for you. 
• People seeking lower premiums than whole life. Universal life insurance comes with lower premiums than whole life insurance.

How Can I Purchase a Universal Life Insurance Policy? 

Burroughs shared the simple steps to purchasing a universal life insurance policy.

“Clients can easily purchase a universal policy after they’ve found a life insurance professional who can help them assess their financial goals and complete an application,” Burroughs said. “You’ll also need to schedule a paramedical exam.” 

Work with an AAA Northeast agent today and discover if universal life insurance is right for you.

For answers to more of your insurance questions, check out our Ask an Insurance Agent series.