Many people are confused because of all the different life insurance policies that are available to them.  One of the most common is a universal life insurance policy because of the flexibility it allows the policyholder.  The benefits of a universal life insurance policy are its ability to be used as a way to invest in your future and as a risk management device. 

The way a universal life insurance policy works is that the account grows as the premiums are paid on it.  How this happens is any money but the basic cost of the insurance is invested with any interest accrued added to the account balance. 

Most universal life insurance policies are set up so the amount of interest is tied to a financial index instead of to direct investment purchases.  No matter how the universal life insurance policy is set up, the basic principle behind it is maintained.  Because of this setup, the account will have continuous growth throughout the length of the universal life insurance policy. 

One of the major advantages of a universal life insurance policy is the inclusion of a death benefit.  If the policyholder dies at any time during the life of the policy, the entire death benefit is paid to the beneficiaries. The amount of the death benefit may be increased or decreased during the life of the policy. The adjustment in death benefit and the resulting changes in the cost of insurance portion of the premium are determined by the Insurance Company and will depend on the insurability of the client.

Since a cash value is accumulating in the account, it is possible to take a loan out on your universal life insurance policy.  Many people enjoy this option and it should be something you discuss with your life insurance agent the next time you meet to discuss your policy.