Universal life insurance policies have two components
1) an insurance component, Where the cost of insurance is deducted from your capital account every month;
2) a capital account where prepaid finance and interest charges accrue on a Tax-exempt basis to help you pay for future premiums.
The increase in your capital account varies with interest fluctuations
Indexed Universal Life:
The increase in your capital account goes with the S&P or Some other stock market index
Variable Universal Life:
The increase in your capital account goes with several mutual Fund offerings offered by your underlying insurance carrier
Investment your way:
Private Placement-Variable Universal Life:
You have a hand in helping your carrier to give you a wider choice of potential investments, with the option to pick Individual equity and debt offerings to suit your particular investment needs.