Universal life insurance is a type of permanent life insurance based on a cash value. Premium payments above the cost of insurance are credited to the cash value. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance charge, and any other policy charges and fees which are drawn from the cash value if no premium payment is made that month. The interest credited to the account is determined by the insurer; sometimes it is pegged to a financial index such as a bond or other interest rate index. Universal life insurance normally offers a lifetime guaranteed minimum death benefit, a tax-free death benefit, transfer of benefit to beneficiaries, a guranteed cash surrender value, and some of the highest commissions available.
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