Flexible premium policies
A Universal Life (UL) — or flexible premium policy — is a form of cash-value policy where the cost of insurance increases every year.
Typically, this annually increasing cost of insurance isn’t noticed by the policyholder, as the initially required premium covers the cost of insurance and policy expenses in the early years of the policy. During those years the excess premium being put into the policy is accumulated as the policy’s cash-value, and the goal of the policyholder is to grow the cash-value to either offset the net amount at risk to the insurance company, or so that in the future as the cost of insurance exceeds the scheduled premium, there is excess cash value and/or growth of the cash-value, that supplements the premium to cover the increasing cost of insurance.
That is only one factor that makes universal life a lot more complicated than whole life insurance. There are three main cash-value crediting/growing methods used in universal life policies: Traditional, Variable and Indexed.