A universal life insurance policy provides long-term (permanent) coverage for the lifetime of the insured party. This type of base policy is beneficial to an insured with a variable stream of income and/or variable expenses and a policyowner who holds a moderate to conservative tolerance to financial risk.

The premium paid by the policyowner is non-guaranteed because the premium is flexible. A flexible premium can either be increasing, level, or decreasing in amount. A flexible premium can also be different in frequency of payments made by the policyowner. Lastly, the premium is subjected to a minimum and maximum payment limit.

The death benefit paid by the insurer is guaranteed. The death benefit is also adjustable. An adjustable death benefit can either be increasing or level in amount.

A living benefit provided by the insurer to the policyowner is a cash value savings account that is based on a credited interest rate. The cash value savings account is non-guaranteed due to the flexibility of the premium. Because of the credited interest rate, a universal life insurance policy does not pay dividends.

Another living benefit is the secondary or no-lapse guarantee. As long as the policyowner pays the premium, the policy is guaranteed to never lapse.

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