How Does A Universal Life Insurance Policy Work? 
There are several variations of `` universal life '' on the market today , but the basic principle exists in most all of them . Universal Life has several names that Jerry V has already mentioned . Universal life was introduced as an `` unbundled life plan '' , in other words you could see the separation between insurance cost , administration costsand investment pool . Every month a premium is paid in and issplit among the administration cost , insurance cost and the investment pool is filled with the remaining part of the premium . Cash values grow based on what `` type '' of investment pool you 've chosen with your purchase . This is buy term and invest the difference in one place . Universal life is a product that must be watched andpossibly changed in amount submittedbecausethe internal insurance costs rise over time , even though a premium is paid , the policy can `` blow up '' if there is not enough internal cashvalues to supplement the external premium you 've provided , the policycan expire . As Jerry noted , these are adjustable policies which means they can be adjusted up or down . Sometimes if you miss too many premiums , you can cause your policy to fail because there is not enough cash values to support the insurance cost . 