Universal life is tricky. Unless the interest is added to the face value for payout, it's not taxable when you claim it. And when you surrender the policy, it's only taxable if there's a GAIN - ie, you get back more than you pay out. Which is pretty rare.

Bottom line - insurance is good if you die. Investments are good if you live. And insurance isn't a good investment. It's a good PLANNING tool, but not a good wealth building tool.

Don't buy accidental death. Don't buy whole or universal. Buy term, invest the difference, and you'll be MUCH better off in the long run.

RUN THE NUMBERS. Do the math. The numbers speak for themselves.

Stay away from "accident" insurance. It is a ripoff.

ADD Insurance only pays if you die by accident. Ex:

Get into a horrible car wreck and die at scene. It pays.
Get into same wreck and die on way to hospital OR at hospital. Wont pay. You died of complications from the accident, not the accident.

On cash value policies, if surrendered, you are subject to taxes of all gains (amount minus what was paid). If paid out, just subject to income tax.

From what is sounds like you are trying to do, get a small term policy on her, enough to cover the essentials, and a larger one on you to cover all your debts, essentials, and some extra to give her a little bit more piece of mind. If you really want to go all out, include her debts in yours as well.

While you have the insurance though, put money aside to cover final expenses, retirement, emergency funds, rainy day funds, etc so that eventually you can stop paying the insurance company.