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Cash Values are the total premiums that are paid for the policy less the deductions for expense charges and the cost of insurance. The remaining premiums paid for the universal life insurance go into a policy account that earns interest.

If your universal life yearly premium payment plus the interest your account earns is less than the charges, your universal insurance account value will become lower. If it keeps dropping, eventually your universal life insurance coverage will end. To prevent this, you may need to start making premium payments, or increase your premium payments, or lower your death benefits.

This policy is similar to whole life insurance. Again, the value of this type of policy is in its flexibility. Both the face amount of death benefit and the premium payments are flexible. The death benefit can be increased but is subject to insurability or decreased without surrendering the policy. 

A range of premium payments can be made to the policy, from a minimum amount to a maximum amount allowed by internal revenue rules. It has the potential for greater cash value growth then whole life if interest rates remain high through the life of the policy.

The policy shifts some of the risk for maintaining the death benefit to the insured. The policy will lapse; that is, the death benefit will no longer be in force, if the cash value or premium payments are not enough to cover the cost of insurance. In a whole life policy, as long as every premium payment is made, the death benefit is guaranteed to be paid if the insured dies.