Universal Life Insurance is a unique policy that combines both traditional insurance and an investment opportunity.
Essentially, with Universal Life Insurance, a policy account is opened, premiums are credited to this account and payments for insurance coverage are deducted. Sometimes your premium amount is more than the actual cost of coverage. This is where the investment opportunity comes in, as it is that amount that is then credited to the cash value of the policy and that earns interest.
Universal Life Insurance is like selecting a medium risk Mutual Fund, as amounts fluctuate on a month-to-month basis. However, you also get coverage that resembles traditional life insurance.