What is a key characteristic of universal life insurance?

A key characteristic of universal life insurance is its flexible premium structure. This allows policyholders to adjust their premium payments and even alter the amount of coverage within certain limits. Unlike whole life insurance, which typically requires consistent, fixed premiums, universal life insurance provides the ability for policyholders to pay higher or lower premiums depending on their financial circumstances. This flexibility can be particularly beneficial for individuals whose financial situations may change over time, as it allows them to ensure that their policy remains active even if their ability to pay varies.

The structure also permits policyholders to accumulate cash value based on the premiums they pay, with interest credited to the cash value. Therefore, the audience can appreciate that the flexibility in premium payments is a significant advantage that sets universal life insurance apart from other types of life insurance policies.