With universal life, the insurance company sets a minimum interest rate based on the contract for the policy (usually a low 2-3%). From there, if the insurance company’s overall portfolio gains in value, then part of the increase is added to the cash value of the company’s universal life policies, up to the maximum percentage amount listed in the policy contracts. In the early 1980s, when interest rates peaked at about 15%, universal life insurance policies accounted for a quarter of all life insurance sold to individuals. If you purchase universal life insurance at a younger age, your premiums will be cheaper. On the lower end, a $500,000 universal life insurance policy would cost a 30-year-old male non-smoker $2,069 per year. However a 45-year-old male non-smoker can expect to pay around $3,648 per year on the lower end.