Universal life insurance offers lifelong coverage and provides flexibility when it comes to paying premiums and options for how the policy’s cash value is invested. A standard universal life insurance policy’s cash value grows according to the performance of the insurer’s portfolio and can also be used to pay premiums, for example, if you have a hardship and can’t afford to pay your premiums.

Although it’s often compared to Whole Life insurance, Universal life insurance offers lifelong coverage, but is less expensive with more policy options. 

Each time you pay your premiums, a portion goes toward covering administrative and life costs of the policy and the rest goes toward building cash value. Your cash value is guaranteed to grow either by the guaranteed minimum interest rate or grows faster depending upon how fast the market is growing. You can also choose to pay the maximum premium possible for the first few years of coverage in order to build a larger cash value quicker and then use that cash value to pay premiums later on. This can be a good strategy if you want to maintain permanent coverage even when you have a smaller income due to changes in job or lifestyle and during retirement when your income may be lower.