Whole Life vs. Universal Life Policies

Whole life and universal life insurance policies are both quality options, but one may work better for you than the other. Here’s what you should know about each.

Get your free consultation

What Is
Whole Life Insurance?

Whole life insurance is a standard, reliable insurance policy. It provides anywhere from $200,000 to more than $1 million in coverage called the death benefit. This money is issued from your insurance provider when you, the policyholder, pass away. It will go to the person or people you choose to use the money on your behalf, called your beneficiaries.

These policies are permanent — as long as you pay your monthly premiums, you’re covered from the moment you purchase your policy till you pass away and your death benefit is issued.

You also receive coverage through a whole life insurance policy from its living benefits. A portion of your monthly payments goes into an investment account and slowly earns you money over time. It grows gradually, but it’s available to access for anything at any time while you’re still living.

What Is
Universal Life Insurance?

Universal life, like whole life, is a permanent life insurance policy. It also provides a death benefit from $200,000 to more than $1 million issued to your beneficiaries.

Universal life policies, unlike whole life, focus heavily on living benefits. There are three different types of universal policies to choose from:

  1. Traditional
  2. Indexed
  3. Variable

Each of these policies has its unique features and approach to living benefits. Traditional universal life, for instance, is similar to whole life but is “unbundled.” Indexed policies invest in stocks like the S&P 500 and are a stable but potentially high-earning option. Variable has high growth potential but is also a less stable option.

Pros and
Cons of Each

Whole life and universal life insurance each provide a substantial death benefit. The main differences are their living benefits — whole life is very stable but fairly slow-earning, and universal has potential higher growth depending on the type of policy you choose. Traditional universal life is also a stable investment opportunity.

Universal life insurance is often a good option for younger individuals with more room for loss and growth over time. Whole life insurance is better for those looking for stable and reliable small growth.

We're Here When You Need Us.

Better Insurance Management cares about you and your future. We’ll work hard to provide the coverage you need. To learn more, call us at (732) 458-5000.