Only 54% of Americans have planned and secured some form of life insurance for their loved ones.
Most people would agree they want their loved ones cared for when they no longer can do it. So, why have nearly half of all Americans not invested in life insurance?
Well, purchasing life insurance can be a bit daunting. There are many types of insurance options, like whole life insurance vs universal life, and it can be costly.
With many options, many people just opt to avoid it. So, let’s take a closer look at whole life and universal life insurance to understand how they differ.
Read on to learn more about these two life insurance options.
What Is Whole Life Insurance?
One type of permanent life insurance is whole life insurance. You decide on a death benefit amount when you get approved for a whole life policy, and the premium rate gets set.
In most cases, the premium will remain the same for the entire time you’re alive and paying them. As long as the premiums get paid, then the policy remains in place.
This is different from term insurance, which can expire after a set period.
Most whole life policies will require a medical exam before approval. But once approved, the premium will stay the same for the duration of the policy, which is one big benefit of this type of insurance.
Another is that a whole life policy can build value and be a tax-deferred asset. You can borrow against the policy if you need funds for medical expenses or college tuition.
Some whole policies can increase with dividends too. You’d want to discuss this option with your insurance agent.
Some whole life policies also come with a paid up additions option. This would allow you to increase the value of the death benefit later on in the policy.
What Is Universal Life Insurance?
Universal life insurance is another type of permanent insurance policy. It has many of the same features as a whole life policy.
The policy will remain in place as long as premiums get paid. It can also grow in value over time.
One of the benefits of universal life is that it offers more flexibility for policyholders than whole life. When you select a universal life policy, you can choose:
- Level premium
- Death benefit
- Adjustable plan
A universal life policy allows policyholders to adjust their death benefit amount, which can fluctuate their premium.
Universal policies pay a portion of the premiums towards the insurance death benefit and another part of the premium towards the investment vehicle options.
Whole Life Insurance vs Universal Life Insurance: Understanding How They’re Different
While whole life insurance vs universal life insurance has lifelong benefits, how the policy matures and its worth can vary. It’s important to research and consider what policy will work best for your needs.
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