In universal life insurance, the cash value grows at a fixed interest rate set by the insurance company. The rate is typically guaranteed not to fall below a certain level In indexed universal life insurance, the cash value growth is tied to the performance of an underlying financial index, such as the  500. The policyholder's cash value can potentially grow at a higher rate if the index performs well, but there is usually a cap on the growth rate to protect against market downturns.

Risk Vs. Reward of Universal and Index Universal Universal life insurance provides a guaranteed minimum interest rate on the cash value, offering stability but potentially lower growth compared to indexed universal life insurance.

Indexed universal life insurance offers the potential for higher returns based on the performance of the chosen index, but it also comes with the risk of lower returns in down markets or if the index does not perform well embed video.

Premium Flexibility Both types of policies typically offer flexibility in premium payments. Policyholders can adjust the premium amount and frequency within certain limits, allowing them to adapt to changes in their financial situation In summary, the main difference between universal life and indexed universal life insurance lies in how the cash value grows: