Minimum premium
The floor that keeps the policy alive — pay only this, and you leave yourself exposed.
The lowest payment needed to keep a flexible-premium policy, such as universal life, in force.
The funding floor
On flexible-premium policies like universal life, you can vary how much you pay within a range. The minimum premium is the smallest amount required in a given period to cover the current cost of insurance and policy charges and keep the coverage in force. Pay the minimum and the policy stays alive, but little or nothing is left over to build cash value.
This contrasts with funding a policy more heavily to accumulate tax-advantaged cash value. Two people can hold the same universal life contract and have completely different outcomes depending on whether they fund at the minimum or well above it.
Why minimum funding is risky over time
Paying only the minimum can work in the short term, but it leaves the policy fragile. As you age, the cost of insurance generally rises. If little cash value has been built and the required minimum climbs, the payment needed to keep the policy in force can increase sharply in later years, sometimes to the point where it becomes hard to sustain and the policy risks lapsing.
Because 'permanent' coverage is only permanent if it stays funded, minimum-funded universal life needs regular review to make sure it will hold up. A licensed advisor can project how the required payment behaves over time and whether your funding plan keeps the coverage in force for as long as you need it.
Common questions
Can I just pay the minimum premium on my universal life policy?
You can, and it keeps the policy in force for now, but it builds little cash value and leaves the policy fragile. As insurance costs rise with age, the required minimum can climb steeply later, risking a lapse. Minimum-funded policies need regular review to make sure they hold up.
What happens if I pay more than the minimum premium?
The extra goes toward cash value, which can grow on a tax-advantaged basis and helps buffer against rising insurance costs later. Funding above the minimum is what makes a universal life policy more resilient over the long term — within the exempt-policy limits.