How is "universal life insurance" defined?

Universal life insurance is defined as a flexible permanent life insurance policy that combines a death benefit with a cash value account. This type of insurance allows policyholders to adjust their premiums and death benefits over time, providing both coverage and savings component that can accrue cash value. The cash value grows on a tax-deferred basis, and policyholders can borrow against it or withdraw funds, making universal life insurance an adaptable option for various financial planning needs.

The flexibility of universal life insurance is one of its standout features; policyholders can increase or decrease the amount of coverage as their needs change, making it distinct from other types of life insurance. Additionally, unlike term insurance, which covers only a specified period, universal life provides lifetime coverage, as long as the required premiums are paid. This unique combination of security and flexibility is what defines universal life insurance effectively.