Is Universal Life Insurance Permanent? Understanding UL Policies 

Key Takeaway

Universal life insurance is a type of permanent life insurance that provides lifelong coverage along with a cash value component, which can be a component for long-term financial considerations as long as premiums are paid when due. Unlike term life insurance, which offers temporary protection, universal life insurance may better suit those who need adaptable premiums and the potential to support financial planning goals.

Permanent Stamp Universal Life Insurance

What is Permanent Life Insurance?

Permanent life insurance provides lifetime coverage, as long as premiums are paid. In addition to a death benefit, it encompasses a savings component, the cash value, which can accumulate over time. Permanent life insurance ensures that the insured is covered for their entire life span, as long as premiums are paid, differentiating it from non-permanent life insurance. The stability and potential cash value growth over years allow policyholders the option to borrow against their permanent policy or make withdrawals if necessary. 

Examples and Definitions of Permanent Life Insurance

Permanent life insurance comes in various forms, including: whole life, universal life (UL), index universal life (IUL), and variable life insurance.

Whole life insurance has consistent premiums and a guaranteed cash value growth rate. Universal life insurance provides flexibility with the ability to modify premiums and death benefits. Variable life offers a variety of cash value growth possibilities, with the potential for gains or losses. Whole life insurance is known for its predictability, while universal life insurance accommodates personalized financial planning. Variable life insurance is suited for those willing to assume financial risk for the chance of greater returns. 

What is Non-Permanent Life Insurance?

Non-permanent, or term life insurance, offers coverage for a specific period and does not include a cash value component. After the term ends, policyholders may renew the insurance, convert to permanent coverage, or terminate the policy. Term life insurance is fitting for temporary financial needs and is often the more economical option compared to permanent life insurance. 

Examples and Definitions of Non-Permanent Life Insurance 

Term life policies provide essential life insurance coverage for a predetermined time frame. Options may include terms from 1 to 30 years, tailored to the insured's specific needs. A "decreasing term" policy's death benefit reduces over time, while a "level term" policy's death benefit remains the same throughout the term. Term life insurance can be a suitable choice for short-term financial protection needs, with options to transition to more comprehensive solutions later. 

The Features and Benefits of Universal Life Insurance

Universal life insurance is notable for its flexibility. Policyholders may adjust their coverage amount, premium payments, and timing within certain limits, helping ensure there is a sufficient cash value to cover costs. The cash value in universal life policies can grow over time, potentially earning interest at market rates. However, policyholders should be aware of the costs, potential for increased premiums over time, and surrender charges that may apply. 

Comparing Universal Life Insurance to Non-Permanent Options 

Universal life insurance and term life insurance serve differing financial needs. Universal life offers lifelong coverage with adaptable features, while term life provides protection for a specified duration. The table below outlines the features of each: 

Term Life vs. Universal Life Table


Universal Life Insurance

Term Life Insurance

Coverage Period 


Fixed Term 

Premium Flexibility 



Cash Value 



Potential for Interest Earnings 



Death Benefit 



Both products cater to different financial strategies and circumstances, without one being superior to the other.

Who Benefits Most from Universal Life Insurance?

Universal life insurance may be favorable for those seeking protection and financial planning flexibility. It offers a safety net along with the potential for cash value appreciation. Families can benefit from some financial help and access to funds during their lifetime. Business owners may find it useful for planning succession and mitigating tax exposure, as the policy's deferred cash growth is typically tax-deferred. 

Ideal Age for Universal Life Insurance

Universal life insurance can be advantageous across various ages, from the late 20s to 50s, and even beyond. The earlier one begins, the more they can potentially benefit from cash value growth. The flexibility of universal life insurance is valuable throughout different stages of financial responsibility. 

FAQ - Frequently Asked Questions about Universal Life

Is universal life insurance beneficial for financial planning?

Universal life insurance can be a part of a well-rounded financial strategy, providing tax-advantaged potential growth of cash value and pliable premiums. It offers a combination of security and the possibility of accumulating funds.

Can premium payments for universal life insurance be adjusted?

One key feature of universal life insurance is the option to modify premium payments within certain guidelines. This allows policyholders to tailor their payments to fit their current financial situation. 

What happens to the cash value in a universal life policy when I pass away?

Typically, if there are no outstanding loans and premiums are paid up, your beneficiaries receive the death benefit. The policy terms determine how the cash value is handled. It's important to understand your specific policy details to know the treatment of cash value after your death.

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This article was generated with the help of artificial intelligence (AI). AI-generated content may occasionally contain errors or misleading information.

The information above is for educational use only and does not represent insurance, tax or legal advice. It is not a recommendation or solicitation to buy insurance. Please talk to your licensed insurance agent for more information about life insurance and your needs. Please consult with the appropriate professional for tax or legal advice. Guarantees are backed by the claims-paying ability of the issuing insurance company.

Article Author: Meredith Bell
Author Bio: Meredith joined Everly in 2022 and has 20+ years of experience in the life insurance industry. She has held various roles in advertising, marketing, communications, sales and distribution support, and product development. Outside of the office, Meredith lives with her daughter Kennedy and their dog Mavis. Meredith enjoys cooking, camping, gardening, hiking, and bourbon (though not always at the same time). She is a live music enthusiast and an avid reader. Her favorite quote is by Thomas Jefferson: "I cannot live without books." Meredith agrees, but would add cheese, movies, and dogs to that list.

Policies are issued by Everly Life Insurance Company (“Everly Life”), Topeka, KS. Everly Life is not licensed in the state of New York and does not solicit or transact business in New York.

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