Universal life insurance is a variation on whole life insurance.

It has considerable flexibility, but consider it a type of term insurance with a policy value fund attached. This type of policy allows the insured to determine the amount and the frequency of premium payments. It also allows policyholders to adjust the policy face amount, up or down, as needed. As a result, one policy serves through all kinds of changes in circumstances. Universal life has an insurance element, a savings element and expense element. Each month, a mortality charge is deducted from the policy’s cash value account for the cost of the insurance protection. This charge may also include an expense or loading charge. As premiums are paid, the cash value accumulates, interest is then credited to the policy’s cash value. As long as the cash value account is sufficient to pay the monthly mortality and expense costs, the policy will continue in effect. One other distinguishing factor of a universal life policy s the fact that partial withdrawals can be made from the policy’s cash value account. And the policy owner may surrender the policy for its cash value at any time.