What type of return does universal life provide?

Universal life insurance provides a minimum guaranteed rate of return on the cash value component of the policy. This means that while the cash value can grow over time, there is a baseline rate that the insurance company guarantees it will earn, regardless of market fluctuations. This feature offers policyholders a degree of security, as they can expect some growth in their cash value even if the market performs poorly.

Additionally, the interest crediting method typically allows for additional earnings based on the insurer's overall performance, but the essential element is that a minimum return is guaranteed. This characteristic distinguishes universal life from products that might offer varied or non-guaranteed returns, providing a balance between security and potential growth.