Universal Life Insurance is an interest-sensitive flexible type of life insurance. You may adjust the premiums and/or death benefit to fit your particular situation, within policy limits. The net premium of a universal life insurance policy is deposited into an interest bearing "accumulation" fund, then the actual cost of the death benefit and any policy administration fees are deducted from this fund. The remainder remains in the "accumulation" fund. The problem with universal life is that in some cases the policy has been "underfunded", that is, the premium payment is less than the cost of the insurance and administration fees, so the accumulation fund, in this case, could be exhausted and at that point the policy would terminate or additional funds would be required to be paid into the insurance policy. If you purchase a universal life insurance policy, make sure that it is properly funded at the beginning.
Interest rates in a universal life policy are subject to change, but should never fall below a guaranteed rate stated in your particular insurance policy.
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