Can a universal life policy be cancelled by the company before the maturity date?

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Asked July 31, 2018

1 Answer


This really depends on the policy and what it says about cancellation. Recall that universal life was meant to differentiate from whole life by making it transparent that there is both an insurance component and a savings component. Many even offer selectable investment options. Of the two types of universal policies (traditional and guaranteed), the traditional universal policy MAY be cancelled if the premiums are not paid AND there is no cash value to cover the premiums. Thus, in the case of traditional universal policies, the policy can be cancelled (allowed to lapse) if they is insufficient cash value to pay the premium when premiums are not paid. Also insurance companies may have more flexibility to cancel with this type of policy.

Conversely, with guaranteed universal life, there is usually a no lapse" feature such that the policy can not be cancelled so long as the premiums are paid. For this and other reasons the guaranteed universal life policy is now the most popular in the universal life marketplace.""

Answered August 1, 2018 by doclee

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