July 09, 2025
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Universal life insurance does more than protect your loved ones; it can also help you build financial value over time. Unlike term life policies, universal life includes a cash value component that grows with interest. If you’re over 50 and have a universal life insurance policy, you could be sitting on more than just financial protection; you might have access to untapped savings. In this guide, we’ll explain how universal life insurance builds cash value, how to access it, and why selling your policy through a life settlement might be the smartest move.
Cash value life insurance is a type of permanent policy that includes a savings or investment component in addition to the death benefit. While your beneficiaries receive the death benefit when you pass away, the cash value builds while you’re still alive, and you may be able to access it through loans, withdrawals, or by selling your policy.
Yes, universal life insurance builds cash value. A portion of your premiums goes into a cash value account that grows based on interest rates set by the insurer or linked to market performance. Unlike term life insurance, universal policies can offer both lifelong coverage and a way to accumulate savings you can use during your lifetime.
Your premiums pay for both the insurance coverage and the cash value account. The death benefit is the amount your loved ones receive. The cash value is the portion you can access during your lifetime. Unless specified otherwise, your beneficiaries typically don’t receive the cash value in addition to the death benefit.
Definitions and policy terminology in this section are adapted from guidance published by the Washington State Office of the Insurance Commissioner (WA OIC).
Below is a comparison of the main types of permanent life insurance that build cash value, so you can see how they differ in risk, flexibility, and growth potential:
Policy Type |
Premiums |
Cash Value Growth |
Risk Level |
Flexibility |
Ideal For |
Whole Life |
Fixed |
Guaranteed, low rate |
Low |
Low |
People who want predictability |
Universal Life |
Flexible |
Based on interest rates |
Moderate |
Moderate |
Those seeking premium flexibility |
Variable Life |
Fixed or Flexible |
Market-driven (investments) |
High |
Moderate to High |
Risk-tolerant policyholders |
Indexed Universal Life |
Flexible |
Tied to market index |
Moderate |
High |
People wanting growth with a cap |
Not all policies accumulate cash value. Here are the main types that do:
Are you considering Selling your Whole Life Insurance Policy? Read our article to learn more about it.
When you make a premium payment, the insurance company splits it into three parts:
It usually takes 2–5 years before you see meaningful cash value growth. The speed and amount of growth depend on your policy type, how long you’ve held it, your age, and your insurer’s performance.
Over 65 and no longer need your policy?
You may be able to sell it for more than its cash surrender value. Find out with a free no-obligation estimate here.
Once your policy has built up enough cash value, you have options.
Example: John, 68, borrowed $25,000 from his policy to cover medical bills. He didn’t repay it before passing. His $200,000 death benefit was reduced to $175,000.
Example: Maria needed $15,000 to help her daughter with college tuition. She withdrew that amount from her universal life policy, lowering her death benefit from $150,000 to $135,000.
Example: Carol, 75, used her life settlement funds to move into a high-quality assisted living facility, easing the financial burden on her children and giving her access to daily care.
Yes. If you no longer need your policy or can’t afford the premiums, you may be able to sell it through a life settlement. This is where Lighthouse Life can help. We simplify the process and help you understand what your policy is really worth. You could receive significantly more than the surrender value.
How It Works:
Universal life insurance isn’t just a safety net, it’s a financial tool. If you’ve held a policy for years, you might have more options than you think. Whether you need extra funds or are considering letting go of your policy, start by getting a free estimate. Lighthouse Life is here to help you turn your policy into something more useful, peace of mind, and cash in hand.