Universal Life Insurance

is another type of permanent life insurance that offers flexibility in premium payments and death benefit coverage. It offers living benefit to the insured if they become terminal, critical or chronically ill. It combines a death benefit with a cash value component that earns interest over time. Universal life insurance allows policyholders to adjust the premium payments and death benefit amount as their financial needs change.

There are two different types of Universal Life Insurance Products:

Index Universal Life Insurance: An IUL policy's cash value growth is tied to the performance of a stock market index, such as the S&P 500. The policyholder can earn interest based on the index's positive return. This means that if the index performs well, the cash value can grow at a higher rate. However, if the index performs poorly, there is usually a minimum guaranteed interest rate that ensures the cash value doesn't decline.

Guaranteed Index Universal Life Insurance: offers a guaranteed minimum interest rate on the cash value. The growth is predictable and not dependent on market performance. The guaranteed interest rate is typically lower than what an IUL policy might potentially earn, but it provides stability and protection against market downturns.