What does universal life insurance provide?

Universal life insurance is designed to offer both flexibility and a cash value component, making it distinct from other types of life insurance. One key feature is the flexible premium payments, which allow policyholders to adjust the amount and frequency of their premium payments within certain limits. This flexible approach can accommodate changes in the policyholder's financial situation or goals over time.

In addition, universal life insurance includes a cash value accumulation feature. This means that a portion of the premiums paid goes into a savings component, which can grow over time based on interest rates set by the insurer. This accumulated cash value can be accessed by the policyholder through loans or withdrawals, providing an additional layer of financial utility.

While other types of life insurance, such as whole life or term life, may offer fixed premium payments or guaranteed death benefits, universal life stands out for its combination of flexibility in premium payments and the potential for cash value growth. Therefore, the correct understanding of universal life insurance lies in its unique offering of both flexible premium payments and a cash value component, making it a versatile choice for many individuals.