What Does Universal Variable Mean?
A universal variable (also called variable universal life insurance) is a life insurance policy that has a death benefit and a feature that allows the policyholder to make investments on stocks or bonds. The portion for investment is placed in a separate account and the death benefit is assured.
Insuranceopedia Explains Universal Variable
Like any other life insurance, the policyholder of a universal variable policy is expected to get a death benefit. The investment feature is what differentiates it from standard life insurance. The policyholder is allotted a portion made separate from the death benefit to invest in securities, like stocks and bonds of their choice. In the US, what they earn from these investments is tax-deferred.
The obvious risk associated with this policy is that investments might not yield positive results. If this happens, the policy might not even have a cash value.