What is universal life insurance?

Universal life insurance is a type of permanent life insurance policy. Unlike term life insurance, it covers you for your entire life instead of just a selected period of time. A universal life insurance policy provides permanent life insurance protection and access to tax-deferred cash values. You are insured with a cash value that grows based on the interest rate set by your insurance company.

How does universal life insurance work?

Like other life insurance policies, each month you will pay a premium to your company. A portion of your payment goes towards the insurance, which include any fees and death benefit coverage, while the remainder becomes cash value and earns interest at a fixed rate. With a universal life insurance policy, you have the ability to withdraw or borrow against your cash value. If you pass away, the tax-deferred death benefit will be paid to your beneficiaries.

Who should get universal life insurance?

Universal life insurance is designed for people who are looking for:
  • Life-long insurance coverage
  • Cash-value growth with tax advantages
  • Built-in flexibility, in case something happens and you need to adjust your premium or death benefit value

How does universal life insurance work?


Decide your goals

  • Protect your family in case of your premature death;
  • Accumulate cash value to supplement retirement income
  • Have a way to help pay for your long-term care expenses
  • Transfer your wealth to future generations in a tax-efficient manner

Determine how much you need

Think about how much your loved ones may need to:
  • Replace your income
  • Fund major expenses like college
What you need:
  • In addition to a pension or retirement plan once you retire
  • Additional costs you might face for long-term care

Using the policy benefits

  • Death benefits are paid to your beneficiaries when you die
  • Once cash value builds up, take tax-free withdrawals to supplement your retirement income
  • Withdrawing cash value will reduce the death benefit

Benefits of universal life

Permanent protection — coverage for your entire life plus no need to renew the policy with higher premiums.

Access to cash value — potential to build and borrow from cash value while you’re alive.

Plan Flexibility — you can change the protection level or how frequently you pay your premium, if you remain within set boundaries.

Tax advantages — both the death benefit and any cash value you withdraw is tax-free.

Universal life insurance for long-term care coverage

A special combination of universal life insurance and long-term care coverage (sometimes called a hybrid life product) can provide cash value to help cover long-term care expenses. It also serves as a life insurance policy providing a death benefit to your beneficiaries.

The universal life and long-term care hybrid policy we offer is Nationwide YourLife CareMatters®.

Flexible universal life insurance

The major advantage of universal life is flexibility. You can change the protection level of the policy (within bounds) and you control the amount of frequency of payments (again, within bounds).

This life insurance offers protection for your family and strategies for leaving a legacy to them. It can also help small business owners with continuation planning.

Tools & resources

Make the most out of your universal life insurance policy.

Topics to dicsuss with your financial specialist

  1. How might the tax advantages on permanent life insurance help me?
  2. Are my current life insurance policies covering my needs?
  3. Have I overlooked anything in my financial plan that might put my family at risk?

Don’t have a financial specialist? Call our team for guidance at 1-866-207-9160.

Some other things to know about universal life insurance

A universal life insurance policy has the flexibility to adjust to your changing needs.

Keep in mind that as your life changes (i.e., marriage, birth of a child or job promotion), so will your life insurance needs. Take care to ensure universal life insurance is suitable for your long-term needs. You should weigh any associated costs before making a purchase.

Life insurance has fees and charges associated with it that include costs of insurance that vary based on the insured person’s sex, health and age, and has additional charges for riders that customize a policy to fit your individual needs.

Not sure if universal life is right for you?
 Use our online tool to help determine which life insurance product can best meet your needs.

If you have questions, we are here to help. Call a specialist today at 1-866-207-9160.

Please read this important information

Guarantees and protections are subject to Nationwide's claims-paying ability. Life insurance is issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio.