Final answer:
The difference between the cash value and the death benefit in a universal life insurance policy is known as the 'net amount at risk,' which represents the insurance company's risk in providing the death benefit minus the accumulated cash value.
Step-by-step explanation:
The difference between the cash value and the death benefit of a universal life insurance policy is commonly referred to as the policy's 'net amount at risk.' A universal life insurance policy is structured to offer flexibility, providing a death benefit as well as a savings element, which is the cash value.
This cash value accumulates over time and can be used by the policyholder for various financial needs. As the cash value increases, the insurance company's risk decreases because the amount they will need to pay out at the policyholder's death (the death benefit) is reduced by the amount of accrued cash value. Hence, the net amount at risk is the death benefit minus the cash value. This figure is crucial for the insurance company when determining premiums and understanding their potential payout on a policy.