Is Universal Life Insurance Fixed Or Variable? 
Universal life insurance can be variable or fixed . They are simply two different types of Universal Life . Here are the basic definitions : Variable Universal Life -LRB- VUL -RRB- is a form of life insurance that can build cash value . The cash value can be invested in separate accounts -LRB- similar to mutual funds -RRB- and the owner of the policy gets to choose which separate accounts are chosen , within the scope of what that particular product offerings are . The word `` variable '' refers to the fact the owner can invest in accounts that vary in value such as stocks and bonds . This variable component results in the cash value in your VUL increasing above or decreasing below what you put in . Universal Life -LRB- UL -RRB- is a form of permanent life insurance where the excess in premium payments are credited to the cash value of the policy . If the cash value is referenced against a stock index such as the S&P 500 , it is called an Indexed Universal Life -LRB- IUL -RRB- policy . An IUL does not put your money in the market but rather references the performance of that market over a measured period of time -LRB- such as a year -RRB- and credits you with interest if the referenced index has increased . Typically , the cash value of an IUL will not decrease as the result of that market declining - they would simply not credit your cash value account with interest for that particular year . 