What Is Universal Life Insurance? 
WHile Steve 's answer above is correct I think it 's important to understand that Universal life is only permanent as long as the continuing increase in `` cost of insurance '' is covered . That means that while some cash value may accumulate after the first several years , as the insured ages the cost of insurance increases and that cost is passed on to the insured . So if the insured does n't increase the amount they pay into the policy it will automatically take from the cash value to pay the difference . When the cash value is gone and the premiums are no longer sufficient to cover the costs , the policy will lapse . So basically Universal insurance is an extended term policy that has potential for cash value as long as it is sufficiently funded . 