What does the term "universal life insurance" refer to?

Universal life insurance refers to a flexible premium life insurance policy that allows policyholders to adjust their premiums and death benefits. This type of policy combines a life insurance component with a cash value savings element, giving the insured the ability to accumulate cash value on a tax-deferred basis over time.

The flexibility in premium payments is a key feature of universal life insurance, enabling policyholders to increase or decrease their payments depending on their financial situation. Additionally, the cash value can earn interest based on current market rates, allowing policyholders to potentially grow their investment over time while still maintaining life insurance coverage. This unique blend of features distinguishes universal life insurance from fixed premium policies, traditional whole life insurance, and investment-only products.