Universal life insurance is a type of permanent life insurance, also known as jumbo life insurance, because of the large amount of life cover it provides. A universal life insurance premium is used to pay for the life cover of the policy, with the rest going towards the savings part of the policy which has a cash value.
Universal life policy premiums are typically paid in one lump sum upfront, but most insurers offer a multi-pay option which allows the cost of the insurance premium to be spread over several years. Insurance companies will often allow multi pay premiums to be paid over 2 to 30 years. The life insurance company will charge a higher overall premium if the multi-pay option is chosen to compensate for not receiving all of the premium upfront.
Premium financing for universal life insurance allows the policy owner to finance up to 100% of the policy value. Universal life insurance policies are usually bought by high net worth individuals who want greater choice and flexibility in the investment part of their permanent life insurance policy.