The key to a proper analysis of universal life insurance is having a breakdown of state premium taxes, expenses, amounts at risk, mortality charges, account values, interest earnings, and potential surrender charges.

The insurance company providing the policy earns a profit (if it plans to stay in business) in a number of ways. It can profit on the expense charges by charging you more than it costs to administer the policy. There also has to be some sort of profit margin built into the mortality charges, so that the charge may be for more than the mortality being experienced at the current time.

In addition, the company is paying you less interest than it is earning on the policy account and/or is charging investment management fees against your account. It is very important for you to have your policy with a profitable company so that the company continues to exist and service your policy for your lifetime.