In a universal life policy, the cash value earns what kind of interest?

In a universal life policy, the cash value earns what kind of interest?

• A. A fixed rate determined at issue.
• B. A current interest rate.
• C. No interest is credited to cash value.
• D. Interest rate tied to stock market performance.

Answer: (B)

In universal life, the cash value grows by interest that is credited at the current rate declared by the insurer. This rate can change over time with prevailing rates, though there is usually a guaranteed minimum. It’s not fixed at issue, and it isn’t tied to stock market performance (that would describe variable or indexed policies). So the cash value earns the current interest rate.

In universal life, the cash value grows by interest that is credited at the current rate declared by the insurer. This rate can change over time with prevailing rates, though there is usually a guaranteed minimum. It’s not fixed at issue, and it isn’t tied to stock market performance (that would describe variable or indexed policies). So the cash value earns the current interest rate.