What defines a universal life insurance policy?

A universal life insurance policy is characterized primarily by its flexibility in both premium payments and death benefits. Unlike conventional life insurance policies, such as whole life, which have fixed premiums and death benefits, universal life allows policyholders to adjust their premiums and face value (death benefit) as their financial needs change over time. This flexibility makes it appealing for individuals who want the security of permanent life insurance while also wanting the ability to adapt their policy to reflect their changing circumstances or financial goals.

This adaptability means policyholders can pay higher or lower premiums within certain limits, allowing for adjustments based on personal cash flow or budget considerations. Additionally, the death benefit can be increased or decreased as needed, providing further customization. These features distinguish universal life insurance from fixed-structure products, term policies, and basic life insurance offerings, which do not offer the same level of flexibility or permanency.