Final answer:
Premium payments in a Universal life policy are used for death benefits, cash value, and loading costs but not for separate account investments, which are specific to variable life insurance.
Step-by-step explanation:
In a Universal life insurance policy, premium payments are typically used for several purposes: providing death benefits, accumulating cash value, and covering loading costs, which include administrative expenses, agents' commissions, and the insurance company's profit margin.
However, premium payments are not used for separate account investments, which are typically associated with variable life insurance policies, not universal life policies. In Universal life insurance, your premiums go into a cash value account after the deduction of loading fees, and the insurer also deducts the cost of insurance (COI) charge. Any remaining balance can earn interest, and you may be able to adjust your premium payments and death benefit over time.