Fred Waddell , Extension Family Resource Management Specialist, Associate Professor, Human Development and Family Studies, Auburn University. Originally prepared by Josephine Turner, Extension Program Specialist, Professor, Human Development and Family Studies, Auburn University.
Universal life is a type of whole life insurance.
It is a mix between term insurance and a savings fund, and it earns interest at a money market rate. You pay a yearly fee for this insurance coverage, which includes a cost of managing the policy. Funds not paying for insurance earn tax-deferred interest. With a universal life policy, the premium can vary. You decide how much to pay toward insurance and toward savings.