How Does Universal Life Insurance Work? 
Universal Life is also known as Flexible Premium Adjustable Life - this is the official name of this type of product . It describes in a simple way how the product works . Premiums are flexible because that can be adjusted upward or downward . You can also skip premiums . You also have a choice of level or increasing death benefit which describes the adjustable nature of the product . Universal life builds cash value that can grow based on a stated fixed interest rate , which may vary over time , but which will never be less than a guaranteed minimum interest rate . Policy costs for administrative expenses and cost of insurance are deducted from the cash value monthly . Universal life is best suited to satisfy the longer-term needs of policyowners who want premium flexibility and cash value accumulations that reflect current fixed interest rate returns , with a guaranteed minimum interest rate . 