A more thorough explanation:

Universal life insurance is a type of life insurance that lasts for the life of the insured and has flexible premiums, death benefits, and cash value. It is similar to whole life insurance in that the insured keeps coverage as long as they pay their premiums and has a tax-deferred investment part of the account. However, unlike whole life insurance, universal life insurance does not have a guaranteed return for the investment account, set premiums, or maybe even death benefit.

For example, John purchases a universal life insurance policy that allows him to choose how much he wants to pay in premiums and how much he wants to allocate towards the investment account. He can also change the death benefit amount as needed. However, the investment account does not have a guaranteed return, so John takes on more risk with this policy.

Universal life insurance allows a lot of flexibility for the insured and insurer to change the policies. An individual may choose this kind of policy because the cash value of the account may have a higher return than other policies, but given the lack of guaranteed return and potential increased premiums, the policies come with more risk.

However, confusion and litigation often arise with universal life insurance regarding when a policy will lapse in case the policy owner does not pay enough to cover minimum premiums and the cash value of the account does not cover the rest. Sometimes policies will contain a guarantee that the policy will not lapse for so many years if a certain amount is paid periodically. Given the wide variety of policies and the changing premiums, individuals should pay attention to the details of their policies, and insurers must follow notification requirements of state and federal regulators.