When it comes to Life Insurance policies, things can sometimes get a little complicated for someone that is looking into their options for the first time. Today we wanted to highlight the differences between Whole Life Insurance and Universal Life Insurance.
Both types of insurance are permanent life insurance policies, meaning that there is no term attached to the insurance policy and the benefits payout when you pass away. Typically, permanent life insurance policies come with a slightly higher premium payment because they can include a savings or an investment portion.
Whole Life Insurance
Whole Life Insurance refers to the traditional life insurance policy that you are probably
thinking of. The beneficiaries will receive the death benefit upon your death.
A neat feature of Whole Life Insurance is that there is a savings component to your
premiums. Because that component can be either invested or put into a high-interest saving
account, that means that your cash value increases with every premium payment that you
make. Due to the accruing interest, it is important to think of Whole Life Insurance as a long
term investment goal. One of the most powerful functions of Whole Life insurance is that
your policy can be designed to receive dividends from the Life Insurance Company which
can be used to purchase more coverage or reduce your premium. You can also leave them
inside the policy to earn interest and grow into more cash over time.
Universal Life insurance
Universal Life Insurance provides much more flexibility when it comes to the benefits and
therefore premium payments that come with this policy. Unlike the Whole Life Insurance
policy, with Universal Life Insurance you are able to reduce or increase your death benefit as
you would like. While these changes affect your premium payment, you are able to be more
flexible with how much you are contributing to the insurance. You are able to decide how the
investment portion of your premium should be set up. Having the option to adjust the value
of your coverage without losing your policy makes Universal Life insurance quite attractive.
You should however watch out for any fees associated with withdrawing too much money
from your policy.
Talk to an Advisor about life insurance options
A Financial Advisor will be able to tell you what kind of insurance suits you best depending
on your goals and situation. Call us today at 1-888-451-6133 and we’ll be able to help you
make the right decision.