What is the minimum premium in a universal life policy?

The minimum premium in a universal life policy is primarily defined as the amount required to keep the policy in force for the year. This is crucial because universal life insurance is designed to be flexible, allowing policyholders to adjust their premiums and death benefits. However, there is a baseline amount that must be paid to ensure that the policy remains active and does not lapse.

If the minimum premium is not paid, the policy could lose coverage or the cash value could diminish significantly. This amount takes into account the cost of insurance and any administrative charges associated with managing the policy. Therefore, understanding the minimum premium is key for policyholders to maintain their coverage without facing unexpected lapses in their insurance.

Other options speak to different aspects of universal life policies, such as cash value maintenance, suggested target amounts, or total premium amounts over time, but they do not specifically align with the definition of the minimum premium necessary to keep the policy active for the year.