Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Variable Universal Life InsuranceUniversal variable life insurance plans are a flexible version of life insurance that combines some of the benefits from term life insurance and from whole life insurance. However, unless you have at least 15 years to invest in your universal variable life insurance plan then it may not be such a good deal.

Even with a minimum of 15 years to build cash value in it, there are many fees associated with this type of life insurance plan that makes it less appealing than traditional life insurance plans or other long term savings plans.

Be sure that you use our free rate quote finder to compare universal variable life insurance quotes with term life insurance quotes and quotes for many other types of life insurance. Just enter your zip for a free insurance rate comparison now!

Traditional Term Life and Whole Life Plans

Traditional life insurance plans are usually based on term life policies or whole life policies. Term life insurance is bought for a specific length of time and whole life insurance is bought for the remainder of the insured’s life.

With either policy, the death benefit is intended to provide financial relief to the beneficiaries of the policy. The beneficiaries typically use this money to pay off estate taxes or to live off of while reorganizing their financial lifestyle that will inevitably change due to the loss of the insured person.

While some changes can be made to these policies, the changes are confined to account information updates, beneficiary changes, and sometimes the conversion of a term life insurance to a whole life insurance policy. Other than that, the coverage and the premiums are set at a fixed amount. This is the case even when the whole life insurance policy is one that builds cash value that can be used to help pay the premiums; the premium remains unchanged, just the way it gets funded is different.

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Universal Life Insurance Plans

Although universal life insurance plans are purchased similarly to whole life insurance policies, there are some fundamental differences. Universal life insurance plans are valid for the entire lifetime of the insured, but the core structure is very different. The premiums are not set and can vary month to month based on the insured person’s financial situation. This is an appealing facet for many people; however it comes with a hefty price.

The fees associated with universal life insurance plans are very high and can even be up to 100% of the premiums during the first year of the policy.

It takes a long time to build any substantial cash value in a universal life insurance plan; usually a minimum of 15 years. Depending on how much you have paid into premiums, you could find that the cash value is not enough to maintain the policy and your policy can then lapse, leaving you without an insurance policy.

Another appealing aspect of universal life insurance is the ability to change the amount of the death benefit. Some people like the flexibility of being able to increase or decrease the amount of life insurance coverage based on their current needs. It is also possible to take out a loan against any accrued cash value on your life insurance policy, giving you tax deferred access to the cash against your policy. However, taking out a loan is not without risk.

A loan against your life insurance policy will decrease your death benefit. Also, if your policy lapses for any reason and you have an unpaid loan, you will be subject to income tax fees (up to 35%) payable immediately.

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Variable Life Insurance Plans

Variable life insurance plans are similar to universal life insurance plans but they have more flexibility as to how your premiums get allocated. The insurance company that sells you a variable life insurance policy will have a portfolio comprised of various investment funds. Each month, you can have a certain amount of your premium allocated to that investment portfolio. Since investments are non-guaranteed risks, your rate of return can vary, hence making your life insurance plan variable. Although there is a risk of losing all of the premiums that you allocate to the investment funds (and therefore your cash value), most variable life insurance plans do guarantee a minimum death benefit as a form of security for your life insurance policy.

If you are looking for a life insurance policy to provide financial benefits to your dependents for estate taxes or financial relief, then a term life insurance policy or a whole life insurance policy may be the right choice for you. If you are looking to purchase a life insurance policy as a retirement investment vehicle, then you may want to consider all of your investment options before settling on a universal variable life insurance plan. While it may be a good deal for you, it does come with high fees and several caveats so– buyer beware. The cost of a life insurance policy is frequently the determining factor on what kind of life insurance plan is chosen.

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