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Both whole life and universal life are permanent life insurance products. The policy is for the life of the insured. The payout is assured at the end of the policy (assuming the policy is kept current) and the policy accrues cash value.

With term insurance a death benefit is only paid to the beneficiary if the insured dies during the specified period. Term Insurance is purchased for a specified period, typically level periods such as 10, 15, 20 and 30 years.

Whole life insurance is a fixed premium , fixed return product, also known as cash surrender life insurance. Whole life insurance offers consumers a consistent premium and guaranteed cash value accumulation. With whole life policies, your insurer pays a periodic dividend into your account, which causes its value to grow over time. You are allowed to borrow against the accumulated monies, however this reduces the value of your benefits. If you die before paying it back, the amount your beneficiary will receive at your death will be deducted from the policy’s total value.

Universal Life , is a more flexible version of Whole Life Insurance. Like Whole Life, universal life features a savings element that grows on a tax-deferred basis. The insurance company invests a portion of your premiums in money market funds, mortgages, and bonds. If there is a return on the investment it is credited to your policy tax-deferred. No matter how the investments perform, the insurance company guarantees a minimum interest rate ( usually 3-4% )will be applied to the policy.

Universal Life offers more flexibility than whole life. With universal life you can adjust the death benefit and the premium amount depending on your financial circumstances.

Consider this carefully when deciding which type of policy works best for you: both universal and whole life policies cost more than term insurance, but depending on your circumstances, the flexibility and long term financial security they offer are often worth the extra expense.

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