What type of life insurance policy has premiums that decrease over time in relation to its growing cash value?

The type of life insurance policy that features decreasing premiums over time as its cash value grows is, in fact, a Universal Life policy.

Universal Life insurance is designed to be flexible, allowing policyholders to adjust their premiums and the death benefit amount. The premiums can decrease because part of the premium goes towards building cash value, which can grow at a variable rate. As the cash value increases, the insurance company can reduce the cost of the insurance coverage, leading to lower premiums over time.

Term Life policies provide coverage for a specified term but do not build cash value and the premium typically remains level for the duration of the term. A Straight Life policy, often referred to as Whole Life, typically has level premiums and does not feature decreasing premiums related to increasing cash value. Similarly, Whole Life policies offer consistent premium payments with guaranteed cash value growth but do not decrease premiums throughout the policy's life.

Understanding these distinctions is crucial for grasping the flexible nature of Universal Life policies and how they differ from other types of life insurance, such as Term and Whole Life policies.