Universal Life Insurance

• Universal life insurance provides a flexible way for policy owners to pay their premiums by utilizing the tax-deferred cash value account that accompanies the insurance. This account is invested into the market and the performance may allow for owners to skip premium payments without the possibility of a lapse or it may be used to accumulate savings.
  
  

Whole Life Insurance

• Whole life insurance is the "traditional" policy that provides a death benefit as long as the premiums are paid on time. It also builds cash value as the policy matures. Details such as schedule of payments, benefit amount and return rates are usually made before the issuance of insurance and may not be changed thereafter.
  
  

Differences

• Whole life insurance costs are locked in and will stay the same until the policy is paid up or paid out. Universal life insurance costs will fluctuate throughout the life of the policy. Also, whole life policies will not disclose the costs of insurance such as mortality charges and administrative costs or how the return on savings was calculated. Universal life policies will provide illustrations that will show these figures.
  
  

Warning

• The costs of a universal life insurance policy coupled with poor investment performance can lead to problems with the policy. Rising costs, which can be attributed to the policyholder's age and/or health and poor market numbers, will lead to higher premiums and may cause him to forfeit his policy if it becomes too expensive.
  
  

Considerations

• When considering life insurance, your costs and insurability will depend on several factors. Age and health are the most recognizable factors when determining your insurance costs, however your job occupation, hobbies and travel destinations can also raise your premiums and in some cases make you uninsurable.