Best Universal Life Insurance: Top Companies in 2024

Q: Can an IUL policy accumulate cash?

Yes, an IUL policy can accumulate cash over time. The best IUL for cash accumulation will vary by preference, but funds are generally invested in an index fund that gradually grows over time. While a year's worth of growth will not result in life-changing wealth, decades of cash accumulation can make for a comfortable nest egg for yourself. Yes, an IUL policy can accumulate cash over time. The best IUL for cash accumulation will vary by preference, but funds are generally invested in an index fund that gradually grows over time. While a year's worth of growth will not result in life-changing wealth, decades of cash accumulation can make for a comfortable nest egg for yourself.

By Jake Hartline •

Updated on January 23, 2024

•

Fact checked by Reuben Cano, LIA

black family sit together at home happy — Image by bbernard via Shutterstock

Universal life insurance is permanent life insurance that gives policyholders more control and flexibility than other life insurance policies. This policy may attract those seeking to build wealth over time and provide a death benefit for their loved ones.

This article explores the top universal life insurance providers. This insurance is unique in accumulating cash value and providing flexibility. We'll compare our top five companies' policies and strengths. We will provide tips for getting the right universal life insurance policy at the best price.

Best universal life insurance: shortlist

Northwestern Mutual - best universal life insurance
MassMutual - best company for variable universal policies
Pacific Life - best indexed universal life insurance
Nationwide - best universal life coverage selection
State Farm - best universal life insurance for couples

Best universal life insurance companies in 2024

We have gathered a list of our top five universal life insurance policies for 2024. These companies have proven to be excellent sources of universal life insurance coverage, and each has its strengths when providing this type of coverage.

1. Northwestern Mutual - best universal life insurance

Northwestern Mutual has garnered widespread acclaim for over 164 years and is the country's top direct life insurance provider. It holds the highest financial strength ratings from the four leading rating agencies, including A.M. Best, from which it earned an A++.

Northwestern Mutual allows policyholders to have flexible premiums. Policyholders can grow cash value by investing with its variable universal policies.

Policies offered: Universal Life, Variable Universal Life, Whole Life, Term Life.

Pros

Awarded the highest financial strength ratings by the four leading rating agencies
Top direct individual life insurance provider in the country
Let policyholders choose premium amounts and how often to pay
Variable universal policies implement investing strategies to maximize growth
Over 164 years in business

Cons

No indexed universal life policies
Payout are not guaranteed for universal and variable universal policies

2. MassMutual - best company for variable universal policies

MassMutual has been in business since 1851, and financially, it has a solid A++ rating from A.M. Best and issued $7 billion in payouts for life insurance and annuities. Customer satisfaction is strong, and it placed third in J.D. Power's 2023 study of the life insurance companies with the highest overall customer satisfaction.

Policies offered: Universal Life, Variable Universal Life, Whole Life, Term Life.

Pros

Can choose policies with guaranteed death benefits
A++ A.M. Best rating
Has been in business since 1851
$7 billion in life insurance and annuity payouts in the previous year
Third-highest overall customer satisfaction rating in 2023 J.D. Power study

Cons

Not all premiums are guaranteed to stay fixed; they may have random price increases
Borrowing past a certain amount from cash value can cause the policy to lapse

3. Pacific Life - best indexed universal life insurance

Pacific Life is a financially stable company that has provided services to satisfied customers for over 150 years. It works with policyholders to ensure they get the right coverage for their budget and lasting coverage without fear of lapsing.

Pacific Life has indexed universal life policies that allow policyholders to build cash value based on stock market index performance, with guaranteed minimum interest, so earnings will always be in a state of growth.

Policies offered: Universal Life, Guaranteed Universal Life, Indexed Universal Life, Variable Universal Life, Term Life.

Pros

A+ A.M. Best rating
Wide selection of universal life policies
Paid $15 billion in benefits to its policyholders in the previous year
Guaranteed universal life coverage can last up until age 121
Offers death benefit protection

Cons

Company can change the conditions of anything non-guaranteed at any time
Lacks option for getting online quotes

4. Nationwide - best universal life coverage selection

Nationwide has the largest selection of universal life policies on this list. This company has excelled, earning its place on many best-of lists by several publications in the current year. The J.D. Power 2023 U.S. Individual Life Insurance Study ranked second in customer satisfaction. Policies are easier to manage on its mobile app, which provides support 24/7.

Policies offered: Universal Life, Guaranteed Universal Life, Indexed Universal Life, Linked-Benefit Universal Life, Survivorship Indexed Universal Life, Variable Life, Whole Life, Term Life, Long Term Care.

Pros

Second-highest customer satisfaction rating in 2023 J.D. Power study
A broad selection of universal life insurance policies
Easily access 24/7 policy support on the mobile app
Considered one of the best life insurance companies in 2023 by multiple outlets
Policyholders have access to long-term care coverage

Cons

Some riders are unavailable for certain policy types
Must speak to an agent in order to get a quote

5. State Farm - best universal life insurance for couples

State Farm has been one of the top life insurance companies for over a century. It recently earned the highest overall customer satisfaction ranking in the J.D. Power 2023 U.S. Individual Life Insurance Study. It also has excellent financial strength, as evidenced by its A++ A.M. Best rating. State Farm provides life insurance to 48 states. It no longer offers policies in Massachusetts or Rhode Island.

Policies offered: Universal Life, Joint Universal Life, Survivorship Universal Life, Whole Life, Guaranteed Acceptance Whole Life, No Exam, Term Life.

Pros

Riders for each universal life policy type
Issues universal life policies up until age 85, and survivorship universal until age 90
Highest customer satisfaction rating in 2023 J.D. Power study
A++ A.M. Best rating
Choose a fixed death benefit or one that's the death benefit plus account value

Cons

No indexed or variable universal life options
No life insurance policies for Massachusetts or Rhode Island residents

Best universal life insurance companies compared

This table provides a general overview of the top universal life insurance companies of 2024:

Company	Policies offered	Best for	A.M. Best Rating
Northwestern Mutual	Universal Life, Survivorship Universal Life, Variable Universal Life, Whole Life, Term Life	Universal Life insurance	A++
MassMutual	Universal Life, Variable Universal Life, Whole Life, Term Life	Variable universal policies	A++
Pacific Life	Universal Life, Indexed Universal Life, Variable Universal Life, Term Life	Indexed universal policies	A+
Nationwide	Universal Life, Guaranteed Universal Life, Indexed Universal Life, Variable Life, Whole Life, Term Life, Long-Term Care	Individuals looking for a wide selection of Universal Life insurance policy types	A+
State Farm	Universal Life, Whole Life, Guaranteed Acceptance Whole Life, No Exam, Term Life	Those wanting Universal Life policies that cover two people	A++

Ranking the best universal life insurance: our methodology

We analyzed many factors when creating this list to ensure these companies were of high quality for several reasons. Our ranking methodology took the following into account:

Overall value. These companies offer reasonably priced universal life policies without sacrificing quality.
Policies offered. We not only looked at the overall policies offered but also the selection of universal life insurance policies each company provided.
Financial strength. All companies listed here have superb financial strength ratings, as indicated by ratings outlets such as A.M. Best.
Online reputation. These companies have received positive reception for online services.
Number of complaints. The universal life insurance providers that made our list received more praise than complaints from their policyholders.
Ease of application. These companies have agents who assist individuals to get them through the enrollment process as quickly and smoothly as possible.

What is universal life insurance?

Universal life insurance is permanent life insurance. It provides a savings account known as a cash value account. A portion of your premiums goes toward maintaining your policy; another part is allocated to your cash value account. The cash value can grow at a fixed interest rate. Another option is to invest it in a stock market index, allowing the funds to build to match market growth. Or, you may opt for a combination of both.

After you've had your policy for some time, you can borrow against the funds in your cash value account for personal use, such as covering emergency medical expenses. Another way to access your cash value is to cash out and surrender your policy. However, surrendering a policy carries surrender fees, and your loved ones won't receive a death benefit since you forfeited the policy.

Aside from its cash value component, universal life insurance functions like any other life insurance policy. You choose a death benefit, designate beneficiaries, and the benefit will be released to your beneficiaries when you pass away.

Pros of universal life insurance

Universal life insurance can be excellent for individuals who want to provide for their loved ones while ensuring a more secure financial future. Universal life offers advantages such as:

More financial growth. Investing in the market can yield greater returns than having funds grow at a fixed interest rate. While there is an element of risk, this has more potential for long-term growth for those who get universal life coverage at a younger age.
Flexibility. Universal life insurance policies can provide flexibility not seen in other policies. Policyholders can choose the scheduling of their premium payments and the amounts.
Protection against losses. Directly investing in the market can risk losing money, but with universal life insurance, you can place a ceiling on losses, so you don't have to worry about negative returns.
Options for individuals with varying levels of risk tolerance. Policyholders have more say over how they'd like their cash value to grow and their funds invested.

Cons of universal life insurance

While universal life insurance has its standout qualities, it's not without its downsides. There are some careful considerations to take into account. Potential issues to consider include:

Returns are not guaranteed. Cash value accounts are subject to fluctuations, for better or worse. Cash value growth can stall in poor economic conditions, which could be distressing for the risk-averse.
Capped growth. When you select a policy that grows based on market performance, the possible gains are capped at a certain percentage. This could be an issue in the advent of a surging market.
Borrowing against cash value can have consequences. If your account value depletes below a certain amount, you face the risk of your policy lapsing. A lapsed policy leads to its fees and loss of the death benefit.
Subject to fees. Universal life policies can have multiple fees aside from premiums, which may make it difficult to afford for some.

Types of universal life insurance

Universal life insurance has different variations to match risk tolerance and investment preferences. Some allow you to invest in index funds, while others will enable you to invest in stocks, bonds, and mutual funds. Such types include indexed universal life, guaranteed universal life, variable life, and variable universal life. Below, we'll provide a brief overview of each.

Indexed

Indexed universal life (ILU) insurance takes a conservative approach to investing by placing funds in an index fund such as the S&P 500. Growth is capped at a certain percentage, but your cash value will also have a floor to keep your account from incurring losses.

Guaranteed

Guaranteed universal life insurance is unique in its simplicity and coverage length. It's more affordable than other options, but it often lacks cash value, and its coverage lasts until a specific age (usually up until 120 years old) rather than indefinitely.

Variable

Variable life differs from variable universal life as it doesn't have the same flexibility as variable universal life. Variable life lets you invest your cash value in stocks, bonds, and mutual funds, but you can't adjust your premiums or death benefit.

Variable universal

With variable universal life, policyholders can build an investment portfolio and choose among various stocks, bonds, and mutual funds. This requires the most management, but it can allow your cash value to build more than it would if you had enrolled in a different type of policy.

When should you buy a universal life insurance policy?

The best time to purchase universal life insurance is when you have loved ones to provide for and desire a policy with features such as cash value and flexibility. You may decide on timing according to the following types:

Indexed	Your cash value will take several years to grow before it can be high enough to be helpful for the significant expenses you may intend to use it for.
Guaranteed	This typically doesn't have cash value. In this case, purchasing it later in life will not be as much of an issue.
Variable	Sooner is better due to the nature of cash value growth, but a variable policy is better when you've had prior investing experience.
Variable-universal	It is best to buy sooner than later. The main difference is that you'll be able to enjoy flexible premiums, too.

Choosing the right universal life insurance policy for you

Choosing the right insurance plan can be overwhelming, but it is easier when you consider different aspects. Tips for making the right choice include:

Decide on coverage amount. Consider the expenses you'd like the death benefit to cover for your loved ones, such as education, housing, and emergency expenses.
Consider cash value. You may use the cash value to pay for future expenses or borrow against it to pay premiums once it reaches a certain amount.
Choose according to risk tolerance. You can invest in the market without risking your finances. If you want to benefit from market growth while minimizing losses, consider an indexed universal life policy. This utilizes an index fund, a more conservative investing approach.
Shop around. Shopping around will allow you to compare rates and enroll in the most cost-effective policy for you.

How much does universal life insurance cost?

Not everyone pays the same rates. Life insurance companies look at the following when determining cost:

Age	The older you are, the more life insurance will cost. However, age won't always prohibit you from enrolling in life insurance if you choose to do so in your senior years.
Credit history	This is accounted for because your credit history indicates how reliable you are when it comes to making payments.
Health history	Health history can reveal a lot. It can suggest lifestyle choices associated with the condition and indicate potential health problems in the future.
Pre-existing conditions	Certain pre-existing conditions are connected to a shorter life expectancy. This can affect the number of premium payments you make, resulting in higher rates.

Can you get a cheap, affordable universal life policy?

Despite its reputation as one of the more costly policies, you can get cheap and affordable universal life insurance. However, rates can vary widely from one individual to another based on the factors mentioned above. However, there are ways you can make your universal life policy more affordable, including:

Opt for lower coverage amounts. The death benefit amount directly correlates with monthly rates. You will pay less if you choose a lower death benefit (e.g., $25,000).
Buy guaranteed universal life. This is the most inexpensive universal life policy, but it has little to no cash value.
Assess your options. Compare rates and find a policy offering the lowest price for you.
Adopt healthier lifestyle choices. Quitting smoking, losing weight, and reducing alcohol consumption can help you secure lower life insurance rates.

The companies mentioned in this article will help you find the universal life insurance to fit your budget. Universal life insurance can be a major plus for those who want more control over their life insurance and experience greater cash value growth. With multiple types of universal life policies around, you can likely find one suitable for your life insurance needs.

FAQ

Can an IUL policy accumulate cash?

Yes, an IUL policy can accumulate cash over time. The best IUL for cash accumulation will vary by preference, but funds are generally invested in an index fund that gradually grows over time. While a year's worth of growth will not result in life-changing wealth, decades of cash accumulation can make for a comfortable nest egg for yourself.

What IUL is best for retirement?

The best IUL for retirement will vary from person to person. However, to make it ideal for retirement, it is encouraged to join an IUL policy early and accumulate cash value over decades. This way, the individual will have enough cash value to use for retirement-related expenses.

Is universal life the same as whole life insurance?

Although universal life insurance and whole life are permanent, they're not the same. They differ in many areas. Universal life offers flexible premiums, and the funds in the cash value can be invested, whereas whole life policies don't have premium flexibility and have fixed cash value growth.