What does 'universal life insurance' offer?

Universal life insurance is designed to provide flexibility in premium payments while also incorporating a cash value component that accumulates over time based on interest rates. This feature allows policyholders to adjust their premiums within a specified range, making it adaptable to changing financial circumstances.

The cash value component is significant as it not only grows at a variable interest rate, which can potentially increase the cash value more than in other types of insurance but also allows the policyholder to borrow against or withdraw funds if needed. This dual benefit of flexibility in premium payment and the potential for cash value accumulation is what sets universal life insurance apart from other types of life insurance policies.

In contrast, options that mention fixed premiums or term coverage do not apply to universal life insurance, as universal policies are characterized by their adjustable premium feature and accumulation of cash value. Thus, the correct choice highlights the primary benefits and structure of universal life insurance.