What is universal life insurance?
Premiums for universal life insurance consist of two parts: the cost of insurance amount and the savings vehicle (cash value). The cost of insurance is the minimum amount required to keep the policy active. Any premium payment over this minimum amount helps accrue cash value which earns interest based on the current market or minimum interest rate.
Cost of insurance: the minimum payment to keep your UL insurance active
Cash value: any payment over the minimum accrues cash value within the policy