Universal life insurance is a type of permanent life insurance and is based on a cash value. Whereas the policy is established where the payments above to cost of insurance are then credited back to the cash value. The cash value is then credited monthly and the policy is debited each month by a cost of insurance charge.

One advantage of the universal life policy is the premium flexibility and the adjustable death benefits. This death benefit can be increased or decreased according to the policyholder's request. The premiums are flexible and can shift some of the risk for maintaining the benefits to the policyholder.

This policy also normally will offer a guaranteed death benefit, a tax-free benefit, cash surrender value or a transfer to a beneficiary.