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Shopping around for life insurance can feel overwhelming, mostly because there are so many decisions to make. Universal life insurance is permanent, so the benefit lasts for your lifetime. You may have the option to increase the death benefit of your policy if you pass a medical exam, and the savings account component typically earns interest. Once you accumulate money in a universal life policy, you may be able to use it to alter your life insurance premium amount.
The best universal life insurance companies offer a variety of policy options with varying limits and premiums. They are reputable, have industry experience, and make it easy to get in touch with customer service. They also provide competitive quotes to customers of varying age ranges.
Best Overall : Northwestern Mutual
We chose Northwestern Mutual as the best universal life carrier because of its financial strength and top standing in the industry, its range of life insurance products including a single premium universal life policy, and the fact that you can get full-service financial planning and life insurance from the same provider.
Excellent ratings for financial strength
Financial planner helps you find the right life insurance policy
No online quote option
Northwestern Mutual has been in operation since 1859, which means it has more than 160 years of experience providing life insurance to consumers. During that time, this popular company has become the highest rated in the business. Northwestern Mutual earned third place in the J.D. Power 2021 U.S. Life Insurance Study, for starters, with 807 out of 1,000 possible points. Meanwhile, the company has superior ratings for financial strength, including an A++ rating from AM Best and an AA+ rating from S&P Global.
Northwestern Mutual is known for its high-quality life insurance coverage, which includes term life insurance, universal life, and whole life. There's also the benefit of working with a Northwestern Mutual financial advisor to decide on the appropriate type and level of coverage. The company's financial advisors can provide additional help with financial planning or retirement planning, as well.
You can customize your coverage with a flexible Custom Universal Life (CUL) policy option that lets you decide how to build cash value that is tax-deferred. You also have the option to fully fund a universal life policy with a single premium, which can be a good benefit if you receive an inheritance or a bonus you want to use for the full premium amount.
On the downside, Northwestern Mutual does not make it easy to get a quote for universal life without speaking to a financial advisor and providing more information on your finances and your long-term goals. With that in mind, they may not be the best option if you want to buy life insurance online.
Read the full review: Northwestern Mutual Life Insurance
Best Reputation : State Farm
State Farm has a tremendous reputation and scored first place in the J.D. Power 2021 life insurance study. The company also offers tons of options for its universal life policies.
Excellent ratings for financial strength and customer satisfaction
Universal life policies can be customized
No policies in Massachusetts, New York, or Wisconsin
State Farm was founded in 1922 by a farmer and has since grown to number 39 on the Fortune 500 list of largest companies. State Farm has excellent ratings, having secured the top spot in the J.D. Power 2021 U.S. Life Insurance Study with 822 out of 1,000 points. State Farm boasts an A++ rating with AM Best and an AA rating with S&P Global, both of which are considered excellent.
State Farm offers a wide range of life insurance products including term life, whole life, and universal life. Its universal life insurance policies stand out from the pack thanks to their overall flexibility and the fact you can tailor your coverage to your unique needs.
With a universal life insurance policy from State Farm, you can buy coverage up to age 85 that lasts a lifetime. You can also choose a level death benefit that will not change, or a death benefit that varies based on your account value. Further, you can tailor your policy even more with a level term rider, a children’s term rider, a guaranteed insurability option, a disability waiver, or a flexible care benefit rider.
How much does universal life insurance from State Farm cost? That really depends on your age, your health, and where you live. For universal life, you must speak with a State Farm agent to get a quote.
We appreciate State Farm’s great variety of universal life options as well as the company's great reputation and financial strength.
Read the full review: State Farm Life Insurance
Best Indexed Universal Life Insurance : Mutual of Omaha
We chose Mutual of Omaha for its indexed universal life insurance policies because the company offers the utmost flexibility in its indexed products, which allows you to buy coverage that suits your goals.
Excellent ratings for financial strength
Tailor your indexed universal life insurance coverage
Must work with an agent to get a quote
Mutual of Omaha was founded in 1909 and offers a wide range of insurance and investment products. Mutual of Omaha secured the fifth spot in the J.D. Power 2020 U.S. Life Insurance Study with 795 out of 1,000 possible points. The company has impressive third-party ratings for financial strength, with an A+ rating from both AM Best and S&P Global.
While Mutual of Omaha offers products like term life insurance and whole life insurance, we chose them specifically as the best indexed universal life insurance provider based on the fact that they have such diverse offerings. Their indexed universal life insurance comes in two forms: Life Protection Advantage and Income Advantage.
Both types of coverage are permanent, but the Income Advantage product emphasizes the cash growth potential of your policy, whereas the Life Protection Advantage option provides more flexibility. All of Mutual of Omaha's universal life insurance policies, including indexed universal life insurance, come with a death benefit, cash value accumulation, tax advantages, flexibility, and the option to accelerate a portion of your death benefit in the event you’re diagnosed with a terminal illness.
One downside of Mutual of Omaha, however, is that you cannot get a quote for their universal life insurance policies online. You must work with an agent to get a free quote, which means providing substantial financial and medical information.
Read the full review: Mutual of Omaha Life Insurance
Best Variable Universal Life Insurance : Prudential
We picked it because Prudential’s variable universal life insurance policies come with more rider options than all the other policies we profiled. Prudential also has strong ratings for financial strength, so this is coverage you can count on.
Strong ratings for financial strength
Multiple types of variable universal life coverage
Long history of quality and success
No online quotes
Too many options can be overwhelming
Prudential Financial has been in operation since 1875, offering insurance products, investments, workplace benefits, and more to a broad range of individuals and employers. The Prudential Insurance Company of America has an A+ rating with AM Best and an AA- rating from Standard & Poor’s.
Prudential carries a wide range of life insurance products including term life insurance, universal life insurance, variable universal life insurance, and indexed universal life insurance. Prudential's variable universal life insurance coverage stood out to us specifically due to the broad range of add-ons and riders you can utilize to customize your policy.
With variable universal life from Prudential, you can purchase coverage with a lifetime benefit with underlying investment options that can boost the long-term cash value of your policy. Riders available include a living needs benefit rider, an accidental death benefit, a children's level term rider, an enhanced disability benefit, an enhanced cash value rider, overloan protection, an estate protection rider, and more. These policies also come with a choice of over 50 underlying investment options or a fixed rate option, both of which you can use to build cash value you can withdraw or borrow against.
You cannot get a quote for universal life insurance coverage without speaking with an agent and providing financial and medical information, however (a free online quote is available for term life insurance coverage).
Read the full review: Prudential Life Insurance
Best Customizable Policy : AAA Life Insurance Company
We chose AAA Life Insurance Company because it offers the most customizable universal life insurance thanks to its varied menu of add-ons you can use to tailor either of its two base plans. AAA Life also offers term life insurance, whole life insurance, and universal life insurance, and you can speak with an agent to help meet your life insurance goals.
Strong ratings for financial strength
Purchase and tailor different types of coverage
Online quotes for term life insurance coverage only
Limited universal life insurance options
AAA Life became part of AAA in 1969 and currently has more than 1.3 million active policies. This company boasts an A rating for financial strength from AM Best.
AAA Life focuses on offering term life insurance, whole life coverage, and universal life insurance, though guaranteed issue whole life insurance is also available, for which you can apply and get coverage online without a medical exam.
What really caught our eye, however, is how flexible and customizable AAA Life's universal life insurance policies are. Specifically, there are two main types of universal life: LifeTime Universal Life and Accumulator Universal Life. Both plans offer benefits that start at $100,000, although you can purchase more coverage depending on your needs. For minors up to 17-years-old, coverage limits go as low as $25,000. Where LifeTime Universal Life comes with permanent coverage with guaranteed level premiums, Accumulator Universal Life focuses on accumulating cash value.
Optional add-ons you can use to customize your policy can vary but may include child term coverage, waiver of monthly deductions, an accidental death benefit, and a guaranteed purchase option that allows you to increase your death benefit at a later date.
AAA Life doesn’t allow you to get a free quote online and without going over your personal situation with an agent.
Read the full review: AAA Life.
All of the companies that made our list of best universal life insurance are reputable, have years of industry experience and have high financial strength ratings. Some companies offer multiple policies and others let you completely customize your coverage. Some companies have financial planners that help you find the right policy. Overall, we recommend checking out Northwestern Mutual. The company offers a range of life insurance products and customization options.
Compare the Best Universal Life Insurance
|Company||AM Best Rating||Coverage Capacity||Issue Ages||Premiums||Policies Offered|
|Northwestern Mutual||A++||Varies||Contact agent||Contact agent||Term, whole, and universal|
|State Farm||A++||Varies||Up to 85||Contact agent||Term, whole, and universal|
|Mutual of Omaha||A+||Varies||Up to 85||Contact agent||Term, whole, and universal|
|Prudential||A+||$10 million||Contact agent||Contact agent||Term and universal|
|AAA Life Insurance||A||$5 million||Up to 85||$75.91+/month||Term, whole, and universal|
Guide to Choosing the Best Universal Life Insurance
What Is Universal Life Insurance?
Universal life insurance is a type of permanent life insurance that offers flexible premiums and coverage, with the ability to accrue cash value inside the policy. For many universal policies, the cash value can earn interest or be invested to grow along with a stock market index. The cash value can also be borrowed against on a tax-free basis.
Policy premiums can be paid over various lengths of time, from a single premium to monthly installments. The premium payment amounts and the total death benefit can be adjusted throughout the policy, giving the insured a high degree of flexibility.
Key Universal Life Insurance Definitions
If you’re considering universal life insurance, there are some key terms to understand:
- Death benefit. The death benefit of a universal life policy is the amount that will be paid out to beneficiaries should the insured pass away while the policy is in force. This amount may be lowered if there are outstanding loans against the policy.
- Permanent life insurance. Permanent life insurance is a type of life insurance that covers the insured for their lifetime. These policies typically offer a guaranteed death benefit, paid out upon the death of the insured.
- Term life insurance. Term life insurance is a type of temporary life insurance that offers a death benefit. This insurance is typically lower-cost than permanent life insurance, but it only covers the insured for a specific length of time.
- Beneficiary. A beneficiary is the recipient of the death benefit of an insurance policy.
- Single premium. A single premium is a one-time payment for life insurance coverage.
- Fixed premium. A fixed premium means that the cost of a life insurance policy will not change over time.
- Cash value. Cash value is an accrued value within a life insurance policy that acts as a type of savings account, typically accruing interest. The cash value of a life insurance policy is funded by policy premiums and may be borrowed against on a tax-free basis. Borrowing against the cash value of a life insurance policy may lower the overall death benefit.
Who Qualifies for Universal Life Insurance?
Universal life insurance is available to individuals that pass a health questionnaire and medical exam when applying for a policy. Qualifications will vary from company to company, with some offering policies to smokers and those in poor health.
How Much Does Universal Life Insurance Cost?
Universal life insurance costs will vary per policy. The price of a policy will depend on your age, location, policy terms, health status, and family history, along with a medical exam. Universal life insurance typically costs more than term life insurance, but less than whole life policies, as premiums and coverage are flexible.
How To Choose the Best Universal Life Insurance
Universal life insurance policies are all about flexibility and finding the right coverage that works for your life. To find the best policy that fits your needs, you want to follow these steps:
- Figure out how much coverage you need. Most experts recommend at least 10 times your annual salary in life insurance coverage. Universal policies allow you to adjust coverage over time, so talk with a professional insurance agent about your options.
- Figure out how much you can afford. Universal policies offer flexible premiums, so you can work with your life insurance agent to set up a payment that fits your budget
- Figure out your goals for the cash value. Universal policies offer flexibility in how the cash value of the policy is saved. For more steady growth, you can choose a guaranteed-interest account. For more aggressive growth, there are index fund and mutual fund investing options. Find one that fits your financial goals.
- Speak with a professional. We recommend speaking with a professional life insurance agent to understand the best options for universal life insurance coverage to fit your individual needs.
Once you know what type of coverage you are looking for, we recommend comparing quotes from top-rated life insurance companies to find the best prices.
Frequently Asked Questions
What Is Universal Life Insurance Coverage?
Universal life insurance is a type of permanent life insurance coverage that is meant to last for your entire life, which makes it different from term life insurance that only lasts for a specific period of time. Of the two types of permanent coverage, whole life and universal life, universal life insurance coverage tends to come with lower premiums and more flexibility than whole life.
The main components of universal life insurance coverage are a death benefit and a savings element that builds cash value over time. However, most universal life insurance policies also let you tweak your monthly premiums to make them more affordable as the cash value of the policy increases.
Is Universal Life Insurance the Same as Whole Life Insurance?
Universal life insurance and whole life insurance are both permanent insurance products, meaning they are built to last your entire life. While both types of policies let you borrow against the cash value that builds in them over time, there are some important differences between these two types of coverage:
- Whole life insurance policies can pay dividends for the company during financially profitable years, whereas universal life does not pay out dividends.
- Universal life insurance coverage often lets you decrease or increase your amount of coverage over time and without a medical exam.
- Universal life can let you adjust the premium amount you pay over time.
- Whole life insurance tends to be more expensive due to the death benefit coupled with dividends.
How Does Universal Life Differ From Whole Life Insurance?
Both universal and whole life insurance are types of permanent life insurance that offer a death benefit and cash value accumulation. While whole life insurance offers fixed premiums and a guaranteed cash value accumulation amount, universal life insurance offers flexible premiums and coverage along with the ability to invest the cash value for growth.
Whole life insurance is best for those seeking permanent life insurance coverage with level premiums while universal life insurance is best for those who want a flexible policy and the ability to change the premium amount or death benefit at any time.
Which Is Better: Term or Universal Life Insurance?
Where universal life insurance coverage provides a lifetime death benefit and a savings component, term life insurance coverage is more simple in its nature. With term coverage, you buy a flat amount of life insurance coverage for a fixed term, usually 10 to 30 years. Once the policy timeline is over, your life insurance coverage is no longer in force and you don’t need to pay any more premiums.
The right type of coverage for you truly depends on your needs and goals. However, term life insurance coverage is typically less expensive than other types of life insurance. For that reason, it is often the best option for parents who want to purchase coverage to replace their income during their working years, or for people who want to leave some money behind to pay for residual debt such as student loans.
In a recent interview with Andrew Mais, commissioner of the Connecticut Insurance Department, he said "Think of term insurance as a function of time. Term life insurance is for a specified number of years, such as 10 or 20 years. It could be the length of your mortgage, for instance, or until your kids are out of college. You’ve got that coverage for that time and you're going to be paying for that time. There’s no accumulation of value. It's simply straight insurance."
Universal life, on the other hand, can come with tax advantages and cash value benefits that can make sense for consumers who need a more complex solution to their financial needs. If you’re unsure of which type of life insurance to buy, it might help to speak with a financial advisor about your concerns and goals.
How Does Universal Life Differ From Term Life Insurance?
Universal life insurance offers lifetime coverage while term life insurance only offers temporary coverage. Universal life insurance policies also offer flexible premiums, a flexible death benefit, and the ability to invest the cash value of the policy. Term policies don’t typically offer a cash value component, and only offer a death benefit for a specific length of time.
Term life insurance is best for those looking for temporary life insurance coverage for a low cost whereas universal life insurance is best for those looking to have permanent life insurance coverage with the ability to raise or lower coverage and premium amounts.
What Are the Expected Costs of Universal Life Insurance?
As you may have noticed from the insurance reviews above, premiums for universal life insurance can vary widely, from $70 per month to several hundred dollars per month. Note that the minimum premium amount for these policies depends on the applicant’s age, state of residence, and health. Policy premiums can also vary widely depending on how much coverage you want to purchase and how high the death benefit of your policy needs to be. Additional riders you select will also add to the total cost of your policy. With that in mind, you’ll need to shop around among insurers to get a life insurance quote for your own policy.
Is Universal Life Insurance Worth It?
Universal life insurance may be worth it for individuals who want lifetime life insurance coverage with the flexibility to adjust the policy as needed. It may also be a good fit for those who want to invest the policy cash value and have the ability to borrow against that cash value on a tax-free basis. Universal life insurance is more expensive than a term policy, and policy options may be overly complicated for those seeking a simple death benefit policy. We recommend speaking with a financial professional before choosing any life insurance policy.
Most insurance companies require new applicants to choose either "male" or "female" when applying for insurance and don't always offer an option for those who identify as nonbinary or transgendered. While being nonbinary doesn't disqualify you from getting insurance, you should be aware that most insurance companies haven't updated their underwriting processes to reflect an awareness of gender issues.
When selecting the best universal life insurance companies, we considered important factors such as company history, financial strength, and ratings from third parties like J.D. Power. We also looked at coverage, additional riders and add-ons, as well as the functionality of each of their websites. We gave special consideration to each company's quote process, as consumer preferences can vary widely.