How Universal Life Insurance Works? 
When you pay a premium to a universal life policy , that amount which exceeds the current cost of insurance is credited to the cash value of the policy . That cash value earns tax deferred interest according to the provisions of the policy . In addition to the current cost of insurance there are fees which are also withdrawn from the policy as stated in the policy . The insurance company generally offers a minimum interest rate set by the contract , but may change the rate credited from time to time . 