What characterizes a universal life insurance policy?

A universal life insurance policy is characterized by its flexible premiums and adjustable coverage. This type of policy is designed to allow policyholders to modify their premium payments and death benefit amounts according to their financial needs over time. In addition to providing life insurance coverage, universal life insurance includes a cash value component, which grows at a variable interest rate, offering a savings element.

The flexibility in payment options and the potential for cash value accumulation are key features that set universal life insurance apart from other types of insurance, such as whole life policies, which typically have fixed premiums. The adjustable nature allows policyholders to increase or decrease their coverage as their circumstances change, making it a versatile option for many individuals.

The investment savings element adds another layer of appeal, as the cash value can grow over time based on credited interest, which can be utilized for various financial needs. This combination of features makes universal life insurance an attractive choice for those looking for flexibility in their life insurance and savings strategy.