What is a corridor in relation to a universal life policy?

In the context of a universal life policy, a corridor refers to the gap between the policy's cash value and the death benefit. The corridor is essentially the amount of insurance coverage that the policyholder has, based on the cash value of the policy.

The size of the corridor can fluctuate based on a variety of factors, such as the performance of the policy's investments, premium payments, and any fees or charges deducted by the insurance company. If the cash value of the policy falls below a certain threshold, the policyholder may need to make additional premium payments to keep the policy in force.

The corridor in a universal life policy is important because it helps to determine the level of insurance coverage provided by the policy. Understanding the corridor can help policyholders make informed decisions about their coverage and adjust their premium payments accordingly.