Whole Life Insurance and Universal Life Insurance
Whole life insurance provides protection for a life-long period.
Advantages of whole life insurance:
- Whole life insurance policies are in force till the end of your life. Whole life insurance gives your piece of mind: should whatever happen to you your family will get financial help and won’t experience financial difficulties.
- Whole life insurance accumulates cash values that are available at any time. You can borrow these cash values at any time you need money and for any purpose.
- Whole life insurance premiums do not change over the time. You may be sure that even after 50 years from now your whole life insurance rate will still be available for you.
- Part of your whole life insurance premiums goes to the investment account.
- You can get dividends from the whole life insurance. Life insurance companies do not know in advance your life insurance rate. If you appear to have paid higher premiums that it was needed the difference will be paid for you or it may be used to lower your whole life insurance premiums.
Disadvantages of whole life insurance:
- The price may seem very high
- High fees and commissions
- Borrowing against your whole life insurance policy may lower the amount that is paid to your beneficiaries (find out more about this point before buying your whole life insurance).
Universal life insurance provides permanent protection like whole life insurance policies. Universal life insurance allows to make savings or cash values that depends on the amount of your universal life insurance premiums, universal life insurance interest rate and universal life insurance policy charges that your life insurance company establishes.
But universal life insurance differs from whole life insurance as universal life insurance offers flexibility in timing and the amount of premiums. The funds will be paid to your family at any time you die on condition that sufficient universal life insurance premiums have been paid. Otherwise the sum available will be too small.
Advantages of universal life insurance:
- Flexible premiums. Your can make universal life insurance payments at any time you want and in any amount.
- Cash values may be available
- You get a permanent protection
Disadvantages of universal life insurance:
- If you did not pay sufficient premiums you universal life insurance policy may cease or will not have any funds to pay to your beneficiaries
- Cash values are limited
- Universal life insurance provides flexibility when it comes to the amount and timing of the universal life insurance premiums. But there’s no flexibility for investments. Your can make only limited investments and can’t invest your money into other accounts.
