Whole Life and Universal Life Compared

Aside from the comparisons of whole life and term life insurance, there are a few more important types ot consider.  Whole life and universal life insurance fall under the category of "permanent life insurance." This type of life insurance is never ending - it lasts until a person turns 100 or dies, whichever comes first. People like permanent life insurance because it is reassuring to know one's family will receive the full death benefit amount, as long as the premiums are paid on time. Permanent life insurance also means that a policy holder never needs to re-qualify for a policy or pay steep renewal fees.

Universal Life Insurance

Universal life insurance is a subtype of permanent life insurance. When the policy holder dies, his beneficiaries will get a lump sum from the insurance company. The sum is determined ahead of time in the insurance contract, and the policy holder makes regular premium payments to insure coverage. Premium amounts depend on several factors. One is the amount of the death benefit. Obviously, a million dollar insurance policy requires higher premiums than a $50,000 policy. Another factor is how often the premiums are paid. Monthly premiums, spread out over time, are relatively inexpensive. You can choose to pay the premiums for a certain number of years or even in a huge lump sum. Your age, healthy, and market interest rates all play a part in your premium amount.

Another benefit of a universal life insurance policy is having security that lasts a lifetime. Security is knowing that your family will get the death payout if something unexpected occurs. These types of policies are also flexible at the beginning. You can pretty much choose how much you want to pay every month. If your income situation changes, you can work with your insurance agent to adjust the premium payment schedule. Universal life insurance also has a guaranteed interest rate that will never fall below a certain number. However, a universal life insurance policy has its downsides. You have to watch the market interest rates, because if they go up, your cash value will also rise, and vice versa.

Whole Life Insurance

Whole life insurance is similar to universal life insurance because it is a form of permanent, never ending insurance. Policy holders get the advantage of building cash value over time. In addition, they never have to renew the policy or re-qualify for anything. They can choose to receive dividends as bonuses every year or not. A whole life policy is popular for a senior policy holder who originally had a term policy but then decided to switch over.

The cash value of whole life insurance policies are the main reason why people get them. Cash value usually accumulates over time, unless the company goes bankrupt. When you are choosing an insurance company with which to sign up for a whole life policy, check their ratings to make sure they are in the black. If the company is doing well, it is an indication that you should participate in their dividends-sharing plan. You can accumulate a vast amount of money over the years while maintaining your whole life insurance policy.

The death benefit should be your main concern when selecting a permanent life insurance policy. Universal insurance and whole life insurance are very similar in many ways. This is why you should get multiple insurance quotes from agents affiliated with this site. The rates they give you are based on specific, unique factors. Compare these rates and ask the agent any questions you may have about the difference between whole life and universal life insurance. Together, you can choose the best policy for your needs.