# Universal Life Insurance

*Insurance — Finicade finance glossary*

Universal life is permanent insurance with flexible premiums and a cash value that earns a credited rate. Its flexibility is also its hazard: if the credited rate underperforms the illustration, the policy can consume its own cash value and lapse decades later, exactly when replacement cover is unaffordable. Indexed versions tie returns to an equity index with caps and floors, which makes the illustrations optimistic and the mechanics opaque.

**Also known as:** UL, indexed universal life, IUL

**Related terms:** [Whole Life Insurance](https://finicade.com/glossary/whole-life-insurance), [Cash Value](https://finicade.com/glossary/cash-value), [Surrender Charge](https://finicade.com/glossary/surrender-charge), [Life Insurance](https://finicade.com/glossary/life-insurance), [Insurance Premium](https://finicade.com/glossary/insurance-premium)

Source: https://finicade.com/glossary/universal-life-insurance