What is one important aspect of universal life insurance policies?

Universal life insurance policies have a key feature that allows policyholders to take loans against the cash value that accumulates within the policy. This option provides flexibility, as policyholders can access their cash value for emergencies or other expenses without having to surrender the policy. The ability to borrow against the cash value distinguishes universal life from term insurance and is an important advantage for individuals seeking both insurance protection and a savings component.

In contrast, fixed premiums are typically associated with whole life insurance rather than universal life insurance, which has flexible premium payments. Additionally, while universal life policies can be designed to manage market risk, some components may still be subject to market fluctuations, particularly in indexed universal life policies. Lastly, universal life policies allow for extra payments beyond the minimum premium, making them versatile for those who want to contribute more towards their policy's cash value. Thus, the feature allowing loans against cash value is a fundamental characteristic that enhances the appeal of universal life insurance.