Universal Life Insurance

Universal life insurance was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments to premium levels based on their individual circumstances. Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable interest rate that is adjusted monthly. Caution needs to be taken however, given the flexibility Universal Life policies provides, to be sure the policy is adequately funded to prevent it from lapsing should interest rates be lower than anticipated, and/or if the premium funding level is lower than what is necessary to keep the policy in force.