Universal Life Insurance combines permanent life coverage and a tax-deferred savings account into one policy. The cash value grows tax-deferred at a fixed interest rate. A part of the money you pay as premiums are deposited into the policy’s account. You can attach your account to a stock market index, which will guarantee a fixed rate of return.Universal life insurance can bring you many benefits, but it is also important to be aware of its shortcomings!Advantages:· Flexibility. Probably one of its biggest advantages, universal life insurance gives you the possibility to lower or increase the premiums payments. This is a great investment opportunity as you can invest a higher amount of money into your policy’s account if the market is going well, or lower the premiums payment if you are having financial problems.· Builds tax-deferred cash value. The policy accumulates non-taxable cash value, which you can withdraw and use as you please. This feature can turn out to be a very helpful savings strategy.· Self-sustaining. If your policy’s account builds enough cash value, you won’t have to pay premiums anymore because the premiums costs will be covered by the savings. This can be very advantageous if you are planning to support the policy for a long time.Disadvantages:· A long-term investment. Universal life insurance is mainly for people who will need coverage after they retire. It takes a lot of time for the policy to accumulate a substantial amount of money and you will have to support the policy’s costs for an extended period. If you want to cancel the policy, some agencies may charge you “surrender fees” which will take a small percent of your savings.· Expensive.The flexibility doesn’t come cheap. You will need to support extra costs like: administration fees, account management fees and the premiums are also higher. Universal life insurance can cost three of four times more than a term policy. Although a part of the money which you pay as premiums are deposited in your policy’s account, you could invest that money into better savings options.· Requires extra attention.This is not a simple policy, like term life insurance! You will have to keep an eye both on the stock market and on your policy’s cash value. In the case of variable universal life insurance, your policy’s cash value will be attached to separate accounts and the interest rate of return will depend a lot on the stock-market.In conclusion, universal life insurance is a flexible policy that gives you some investment opportunities, but at the same time it is costly and demands a lot of attention and management.