In universal life insurance, the cash value is a built-in savings component that grows tax-deferred and can be accessed while you’re alive.

How it grows: A portion of your premium goes into the cash value, which earns interest or investment returns. Depending on your policy, you may have options ranging from guaranteed interest accounts to equity-based funds. With equity investments, the cash value can grow faster but may also fluctuate with the markets.

Withdrawals and loans: You can generally withdraw funds, borrow against the cash value, or even use it to pay future premiums. However, loan rules can differ depending on the type of investments inside the policy. For example, if your cash value is invested in equity funds, the insurer may apply stricter loan-to-value limits or adjust loan eligibility to account for market volatility.

Impact of borrowing: Any withdrawal or loan will reduce the death benefit and may have tax consequences if not repaid. If loans are not managed properly—especially in policies tied to equities—there’s a higher risk the policy could lapse.

Bottom line: The cash value in universal life insurance gives you flexible access to funds, but when equity investments are involved, loan rules and risks can look different compared to more stable options.

Complexity: Understanding the policy's structure and investment options can be challenging.

Cost: Premiums can be higher compared to term life insurance.

Investment Risk: The cash value is subject to market fluctuations.

Policy Lapse Risk: If the cash value is insufficient to cover the cost of insurance, the policy may lapse.

Here is a good consolidated comparison among all