5 Best Universal Life Insurance Companies of October 2025

Why You Should Trust Us

Investopedia’s editors and researchers analyzed 45 life insurance companies using key factors like financial stability, customer satisfaction, coverage options, and cost to create our unbiased, comprehensive reviews. Investopedia launched in 1999 and has reviewed life insurance companies since 2020. We’re dedicated to helping you choose the best life insurance for your needs.

What Is Universal Life Insurance? 

Universal life insurance is a permanent life insurance policy that offers policyholders flexibility in the amount of premiums they pay and the death benefit they receive. This insurance policy offers lifetime coverage and includes cash value, which earns a variable return based on market interest rates. 

Policyholders can use cash value to pay for premiums and even borrow from it. If a policyholder wants to terminate the policy early, they may be able to withdraw the cash value, but could have to pay surrender fees.

Common Universal Life Insurance Terms To Understand

Permanent Life Insurance 

Permanent life insurance is a type of life insurance that covers a policyholder through their lifetime, provided they pay the premiums. Permanent life insurance typically offers cash value, a cash component that grows tax-deferred. 

There are different versions of permanent life insurance, such as whole life and universal life. With universal life insurance, premiums and the death benefit are flexible. The interest rate on cash value is variable, too. In contrast, with whole life insurance, the death benefit, premiums, and interest rate on cash value are typically fixed.

Cash Value 

Universal life insurance, like other types of permanent life insurance, has a cash value feature, which allows policyholders to accumulate money tax-deferred over their lifetime. The cash value earns a variable interest rate that fluctuates with changes in the market and economy. However, most insurers offer a minimum interest rate on cash value. One of the major benefits of cash value is that it can be used while policyholders are alive. Policyholders can borrow from it and use it to cover premiums. 

Premiums 

Insurance premiums refer to the price an individual pays for an insurance policy. Life insurance premiums are typically based on factors like your health status, age, gender, medical history, and more. Universal life insurance premiums are flexible and increase as policyholders age. Policyholders can choose to pay more or less than the minimum premium amount. 

Here’s how it works: When a policyholder pays a premium, some of that money goes toward the cost-of-insurance—which is usually the minimum premium amount. The cost-of-insurance pays for the death benefit and administrative costs. Payments above the minimum premium go toward building cash value. 

When a policyholder pays less than the minimum premium, the cash value they’ve accumulated is used to cover the additional cost of the premium. However, if a policyholder consistently pays less than the minimum premium and doesn't have sufficient cash value built up to cover their premiums, they could be at risk of their coverage lapsing.

Death Benefit 

A death benefit is a payment that a life insurance policyholder’s beneficiaries receive upon death. With universal life insurance policies, the death benefit is sometimes adjustable so that policyholders can increase or decrease it. When policyholders increase the death benefit, the premiums increase. They may need to pass health underwriting again to add more coverage. If policyholders reduce the death benefit, the premium will fall, and no health underwriting is required.

Surrender Value 

If you opt to end permanent life insurance coverage before you die, you receive the remaining cash value you’ve accumulated, but it could come at a cost. You’ll typically be required to pay a surrender charge if you end your policy. The surrender value refers to your total cash value minus the surrender charges. Universal life insurance surrender charges typically decrease the longer you own the policy and end 10 to 15 years after purchase. 

Who Is Universal Life Insurance Good For? 

Universal life insurance is a good option for people who want lifelong coverage and prefer flexibility when it comes to their premiums and death benefit. People who have variable income may benefit from universal life insurance because it allows them to adjust premiums based on their financial circumstances. For example, universal life might be a good fit for a seasonal business owner who wants to pay more when revenue is high and less during slow stretches rather than a fixed monthly premium.

Universal life insurance is also a more affordable way to buy lifelong coverage. Since universal life insurance is a type of permanent life insurance, it generally has significantly higher premiums than temporary term life insurance. However, universal life is less expensive than whole life insurance.  

Pros & Cons of Universal Life Insurance

Pros Explained

• Flexible premiums: With universal life insurance, policyholders can adjust what they pay each year, provided they cover at least the minimum premium. This can be helpful if you have a variable income or just want flexibility in how much you pay. For example, policyholders could pay less if they experience a layoff or another financial setback and more when their income is higher.
• Cash value: Cash value allows you to amass money that can then be used to cover premiums and to borrow from. While the interest rate fluctuates, most universal policies offer a minimum rate.
• Adjustable death benefit: Policyholders may have the option of increasing or decreasing the death benefit even after they’ve purchased the policy. This can be helpful if someone decides that they want to pass on a smaller or larger benefit to their beneficiaries or if they want to adjust their insurance cost.

Cons Explained

• Returns on cash value aren’t guaranteed: Since cash value interest rates are tied to the market and economy, they can fluctuate. Higher interest rate periods are more beneficial for policyholders, but lower interest rate periods lead to less growth. There’s more risk than with the guaranteed return on whole life insurance.
• Premiums increase over time: Universal life insurance premiums can increase substantially as you age. If you don’t have enough money to pay the premiums and cash value to help cover them, your coverage could lapse.
• Takes more work to manage: Universal life insurance requires more management than a whole life policy. You must pay more than the minimum premiums to build up cash value so you can cover the higher costs later in life. If you aren’t paying attention or underestimate the future insurance costs, you’ll need to pay significantly more as you get older or risk losing coverage.
  

How We Review the Best Universal Life Insurance Companies 

Investopedia’s list of the best universal life insurance companies is based on detailed research of 45 providers. We surveyed 500 recent life insurance buyers in March 2024 to inform our research. 

The results helped us pick 70 criteria, including financial strength, customer satisfaction, policy options, and digital tools, which our editors and researchers used to evaluate each company. This ensures Investopedia’s rankings reflect what matters most to consumers.

Our data collection process lasted from May 20 to July 3, 2024. Our sources included company websites, inquiries to company representatives, and information from rating agencies.

To rate each company, we sorted the criteria into six categories, which were scored according to the weights below for this article:

• Policy Features: 39%
• Policy Types: 20%
• Riders: 13%
• Financial Stability: 10%
• Customer Satisfaction: 10%
• Application and Online Service Features: 8%

For more information, read our full methodology explanation.