How Universal Life Insurance Can Make Your Insurance Free Over Time
July 5, 2025
By: Jhoanne Diaz
When most people think about life insurance, they picture a monthly bill—another expense to manage, with no return unless something unfortunate happens. But what if your life insurance could actually become an asset? What if, instead of being a lifelong cost, it could eventually pay for itself?
That’s the unique promise of universal life insurance—a powerful financial tool that not only provides lifelong protection but also builds cash value over time. With the right strategy, this cash value can grow large enough to cover your future premiums, effectively making your insurance free down the road.
I used to own a Term 20 life insurance policy. At the time, it seemed like the most affordable and straightforward option. But over the years, I started to feel uneasy about the fact that I was paying into something that only had value if I passed away—and that’s not exactly the outcome I’m hoping for.
That’s when I discovered universal life insurance. What really stood out to me was the ability to build cash value—a living benefit I could actually use. Even if nothing happens to me (which is the goal!), I still get value from the policy. It’s not just about protection anymore—it’s about growth, flexibility, and long-term financial planning.
Universal life insurance is a type of permanent life insurance that combines:
Lifelong coverage
A cash value component that grows over time
Flexible premiums and death benefits
Unlike term life insurance, which expires after a set period, UL policies are designed to last your entire life—and they come with a built-in savings account that earns interest.
How Can It Pay for Itself?
The key lies in the cash value. Here’s how it works:
You pay premiums—a portion goes toward the cost of insurance, and the rest goes into your cash value account.
The cash value grows—based on interest rates or market performance (in the case of Indexed UL).
Over time, the cash value can become large enough to:
Cover future premiums
Be withdrawn or borrowed against
Supplement retirement income
Eventually, you can stop paying out-of-pocket premiums and let the policy’s cash value cover them instead. This is often referred to as a "self-sustaining policy."
In my case, I chose to slightly overfund my policy in the early years. It’s amazing to see the cash value grow steadily—knowing that one day, it could cover my premiums entirely. That’s a level of financial freedom I never had with term insurance.
Let’s say you start a UL policy at age 35 and pay $300/month. By age 55, your cash value might have grown enough to cover the annual cost of insurance. At that point, you could stop paying premiums, let the policy continue growing while still maintaining your death benefit coverage.
I haven’t reached the point where my policy fully pays for itself yet, but I’m already seeing the rewards. The cash value is steadily growing, and it’s reassuring to know that I’m building something I can benefit from during my lifetime—without needing to rely on the death benefit to see its value.
How Did I Make it Work?
Overfund early: Pay more than the minimum premium in the early years to build cash value faster.
Monitor performance: Work with your advisor to review the policy annually.
Avoid over-borrowing: Loans reduce the death benefit and can cause the policy to lapse if not managed.
Is It Right for You?
Universal life insurance is ideal if you:
Want lifelong coverage
Like the idea of building tax-deferred savings
Prefer flexibility in premiums and benefits
Are comfortable with a long-term financial strategy
For me, it was about peace of mind. I wanted to know that my money was doing more than just covering a “what if.” Now, it’s part of my financial plan—and it’s working for me while I’m still here to enjoy it.
Final Thoughts
Universal life insurance isn’t just about protection—it’s a financial tool. With the right strategy, it can evolve into a self-funding asset, giving you peace of mind and freeing up your cash flow later in life.
Interested in learning more about how Universal Life Insurance could fit into your financial plan?
I’d love to chat and help you explore your options from our insurance providers. Feel free to reach out—your journey to financial wellness might start with just one conversation.
Email or Call:
Jhoanne Diaz
Email: jdawis@yahoo.com; jhoanne.diaz@forthrightltd.com
Phone: (587)429-7816
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