Which of the following best describes universal life insurance?

Universal life insurance is accurately described as a flexible premium policy with a cash value component. This type of policy allows policyholders to adjust their premium payments and the amount of coverage, which provides flexibility not typically found in traditional whole life policies.

Moreover, universal life insurance accumulates cash value, which grows on a tax-deferred basis. The cash value can be accessed through withdrawals or loans, giving policyholders the ability to use their accumulated value for various financial needs. This distinguishing feature emphasizes the policy's dual role as a life insurance product and an investment vehicle.

The flexibility in both premium payments and death benefits makes universal life insurance appealing to individuals looking for a customizable approach to life insurance. In contrast, the other options either misrepresent how universal life operates or focus on aspects not characteristic of this policy type. For example, universal life is neither purely an investment without insurance nor a short-term policy. It fundamentally combines life insurance with the potential for cash value growth over time.