Definition of "Universal Life Insurance"

Unlike traditional cash-value policies (known as "whole life"), universal life policy returns were freed from long-term, fixed-rate contracts and replaced with policies whose returns were tied to short-term interest rates and periodically adjusted. In addition, premiums and death benefits can be changed by the policyholder.

A flexible-premium, adjustable-benefit life insurance contract that accumulates cash values.

A form of cash value life insurance under which the premiums and amount of coverage are flexible. After the first-year premium, additional premiums and coverage can be adjusted to better meet the needs of the policyowner.