What is Universal Life Insurance characterized by, compared to other policies?

Universal Life Insurance is characterized by its flexibility in premium payments and investment options. This type of policy allows policyholders to adjust their premium payments and choose how their cash value is invested from a variety of options. However, this flexibility often comes at the cost of higher administrative expenses. Unlike more straightforward policies, the management of a universal life policy requires more complex calculations and record-keeping, contributing to significant administrative costs.

Premium paying flexibility also means that the insurer has to manage a more complicated system, which can drive up the costs associated with providing this type of insurance. Thus, recognizing the complexity and attendant costs helps to differentiate universal life insurance from other simpler products that may have lower administrative burdens and costs.