Under a whole life policy, the purchaser agrees to pay regular premiums to an insurance company in exchange for a guarantee of a specified benefit payable to their spouse or other beneficiaries upon their death. Earnings on a whole life policy are set by the insurance company based on the overall return on its investments. Earnings above and beyond those required to cover the death benefit go to the policy's cash reserve, which you can borrow against, withdraw, use to pay premiums, or allow to accumulate for long-term goals such as retirement. Then, interest rates skyrocketed. People began taking a hard look at the rate of return they were receiving from their whole life policies, and comparing this with what they would be earning if their money was invested instead in the stock or bond markets, or just money market funds.
Universal life allows the purchaser to set the premium and the death benefit.
As such, it lets people establish a permanent policy with a lower premium than they would have to pay under a whole life policy. Under whole life, premiums are set by the insurance company based on long-term interest rates and actuarial tables predicting the period of time over which the premiums will be paid. Also, higher interest rates mean money doesn't have to work as hard to generate the same return. As a result, universal life premiums are typically lower during periods of high interest rates than whole life premiums for the same amount of coverage. And, while the interest paid on universal life insurance is often adjusted monthly, interest on a whole life policy is adjusted annually.