In the world of cash value life insurance, universal life insurance, along with variable and whole life insurance, are like the three amigos (minus the sparkly hats and misadventures through Mexico). They provide life insurance coverage, but they also act as a savings account. Cash value is the cash buildup in that savings account.
Here are some things you should know about each of the three amigos. Whole life insurance returns tend to barely keep up with—and sometimes fall below—inflation. Universal life and variable life rates of return fluctuate more. And while they can outperform whole life, as I’ve said over and over again, the fees tacked onto universal life insurance policies will eat you alive.