Universal Life Insurance for Expats: Flexible Cover and Estate Planning

For high-net-worth expatriates, universal life (UL) insurance occupies a distinct position in long-term financial planning. Unlike a straightforward term policy, it provides lifelong protection combined with a savings component and a degree of premium flexibility that few other products match. Understanding how it works — and how it differs from related products — is essential before committing to a structure that will typically be held for decades.

What Is Universal Life Insurance?

Universal life is a form of permanent life insurance: it does not expire at the end of a fixed term. The policy remains in force for the policyholder's entire life, provided it is correctly funded, and pays a guaranteed sum assured on death regardless of when that occurs.

What distinguishes universal life from traditional whole-of-life policies is its transparency and flexibility. Each premium payment is split by the insurer into two components:

1. Cost of insurance (COI) — the charge for providing the death benefit, which typically increases with age.
2. Accumulation account — the remainder is credited to a cash account within the policy, which earns interest at a rate declared by the insurer.

The policyholder can see both charges and credits clearly on annual statements, giving greater visibility than older with-profits whole-of-life products.

How Universal Life Differs from Term and Whole-of-Life Cover

Term insurance provides a fixed sum assured if death occurs within a specified period — 10, 20 or 25 years, for example. If the policyholder survives the term, no benefit is paid and the policy ends. Term cover is the most cost-effective way to protect against a specific liability (a mortgage, a business loan) but provides no permanent protection and no accumulation.

Traditional whole-of-life policies also provide lifelong cover but typically operate on a with-profits basis, where the sum assured and bonuses are declared by the insurer without the same degree of transparency. Premium flexibility is limited or absent.

Universal life sits between these structures: genuinely permanent, but with a clear charging structure and the ability to vary premiums within policy limits. This flexibility is particularly valuable for expatriates whose income can fluctuate with exchange rates, business cycles, or career transitions.

The Accumulation Account

The accumulation account is the savings element of the policy. After the cost of insurance and any policy charges are deducted, the balance earns a declared interest rate. This rate is typically linked to the insurer's fixed-income portfolio — broadly, investment-grade bonds and money-market instruments — rather than equities.

Unlike a unit-linked investment bond, the policyholder does not select underlying funds. Instead, the insurer credits a declared rate, which may change annually or more frequently. Most providers apply a minimum guaranteed rate (often 1–2% per annum), ensuring the account does not earn below a floor even in adverse credit conditions.

Over time, if premiums exceed the cost of insurance, the accumulation account grows. This value can be accessed during the policyholder's lifetime via partial surrenders or policy loans, though doing so reduces the death benefit and should be approached with care.

Premium Flexibility

One of the most practical features of universal life for expatriates is the ability to vary premium payments. Within the parameters set by the insurer and the policy illustration, the policyholder may:

• Increase premiums to accelerate accumulation, particularly in higher-earning years.
• Reduce premiums during periods of lower income, with the cost of insurance met from the accumulation account.
• Suspend premiums entirely for a period, provided the accumulation account is sufficiently funded to cover ongoing charges.

This flexibility must be managed carefully. Sustained under-funding depletes the accumulation account, increasing the risk of policy lapse. Policies should be reviewed regularly against the original illustration to ensure they remain on track.

Sum Assured Options

International universal life policies typically offer two main structures for the death benefit:

• Level sum assured — the death benefit remains fixed throughout the life of the policy. The accumulation account growth does not increase the benefit paid.
• Increasing sum assured — the death benefit increases over time, often in line with accumulation account growth or at a fixed percentage annually. This option is more expensive as the cost of insurance charge is higher.

The appropriate structure depends on the estate planning objective. Where the primary aim is to provide a known, fixed legacy — for example, to cover a specific inheritance tax liability — a level sum assured is generally more efficient. Where broader wealth transfer is the goal, an increasing benefit may be considered.

Why Universal Life Is Popular with High-Net-Worth Expats

Several features make universal life particularly well suited to wealthy international clients:

Permanent protection regardless of health changes. Once a policy is in force, the death benefit is guaranteed regardless of subsequent health deterioration. For high-net-worth individuals who are currently in good health, locking in permanent cover at current rates is a long-term asset.

Estate planning and IHT efficiency. A UL policy written in an appropriate trust — a discretionary trust is common — sits outside the policyholder's estate. On death, the sum assured is paid directly to the trust and distributed to beneficiaries without passing through probate, and potentially without attracting a 40% UK inheritance tax charge on amounts above the nil-rate band (£325,000 in 2026, or £500,000 with the residence nil-rate band where applicable). For individuals with large estates, this can represent a material saving.

Portfolio diversification. The accumulation account, earning a declared fixed-income rate, provides a component with low correlation to equity markets. For investors with concentrated equity or property exposure, this can contribute to broader portfolio balance.

Currency options. International providers typically offer policies denominated in US dollars, sterling, euros or other major currencies, allowing the client to match the policy to their functional currency.

Using Universal Life in Trust Structures

Writing a universal life policy in trust is central to its estate planning value. The most common structure is a discretionary trust, where the policyholder (as settlor) names a class of beneficiaries — typically spouse, children and other family members — and appoints trustees to administer the trust assets.

Key points to understand:

• The trust must be established correctly at outset, with appropriate deed and trustee arrangements.
• Premiums paid into the policy are typically treated as gifts into the trust, and should be within the annual exemption (£3,000 in 2026) or made from surplus income to avoid potential IHT implications.
• The trust sits outside the settlor's estate provided it is not a gift with reservation of benefit.
• Trustee investment powers and the terms of distribution should be reviewed by a qualified solicitor familiar with international trust law.

Global Investments works alongside legal advisers in the relevant jurisdictions to ensure trust structures are correctly established and documented.

Minimum Sum Assured and Provider Landscape

Universal life insurance is not a retail product. The minimum sum assured for most international providers is US $1 million or the sterling equivalent, reflecting the product's design as a high-net-worth estate-planning tool. Some providers set higher minimums for certain age bands or markets.

The principal providers serving the international expatriate market in 2026 include:

RL360 LifePlan (Isle of Man) — established provider with strong track record; competitive credited rates; flexible trustee arrangements.

Friends Provident International (Isle of Man) — long-standing presence in the Gulf, Asia and European markets; offers both universal life and related investment bond structures.

Zurich International Life (Isle of Man and Dubai International Financial Centre) — global brand with broad underwriting capacity for high sums assured; suitable for complex large-sum cases.

Each provider has distinct premium structures, charging philosophies, credited-rate histories and underwriting appetites. An independent adviser with access to all three — and to specialist reinsurance markets for very large cases — is better placed to identify the most appropriate solution than one tied to a single insurer.

What to Consider Before Proceeding

Universal life insurance is a long-term commitment. The cost of insurance increases with age, meaning the policy becomes progressively more expensive to maintain in later life. A policy that is surrendered early — before the accumulation account has had time to grow — may return less than the total premiums paid. This is not a short-term product.

Prospective policyholders should:

• Obtain a full policy illustration before commitment, showing projected values under low, medium and best-estimate credited-rate scenarios.
• Understand the surrender charge schedule (typically applied for the first 8–12 years).
• Ensure the trust structure is correctly drafted and reviewed by independent legal counsel.
• Review the policy against its illustration at least every two years.

The above is for information purposes only and does not constitute financial advice. Tax treatment depends on individual circumstances and may change. You should seek independent financial and legal advice before establishing any life insurance or trust structure.

How Global Investments Can Help

Global Investments has worked with high-net-worth expatriate clients for over 32 years, with access to the full range of international universal life providers including RL360, Friends Provident International and Zurich International Life. We are independent, meaning our recommendations are not tied to any single insurer.

We assess your estate planning objectives, health position, premium capacity and currency requirements before recommending a structure. Where appropriate, we co-ordinate with specialist trust lawyers and tax advisers in your country of residence and domicile to ensure the policy and trust are correctly established.

If you would like to understand whether a universal life policy is appropriate for your circumstances, speak to one of our advisers. You may also find it useful to read our related guides:

• Universal Life vs Offshore Investment Bond: Which Is Right for Estate Planning?
• High-Value Life Insurance Underwriting: What High-Net-Worth Expats Need to Know
• Medical Underwriting for Expat Insurance: What to Expect