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Universal and whole life insurance are both types of permanent life insurance, which means that you'll be offered guaranteed coverage up until death, as long as you are paying regular premiums on time. Both these policies have an in-built cash value that you can access after a few years of accumulation that you can surrender for most of its value or borrow against.

In whole policies, premium rates you will pay are usually locked in for the rest of your life. Most whole life policies also have a non-guaranteed cash value element called 'dividends' which can enhance the value of the policy over time.

Universal Life policies differentiate three elements in a policy and treat them separately. These 3 elements are the death benefit or protection element, the expense element and the cash value element. With this separation comes flexibility that allows the insured to modify the premium in case there is a need. After provisioning for administrative charges, death benefits, riders and supplemental income, interest is credited to the policy based on its cash value. Read more about other types of permanent life insurance, compare life insurance coverage and find out which policy is the best for you on aggregator websites like

Denise Mancini

Disclaimer: I work for AccuQuote and this is my personal opinion.

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Q: Is Universal life insurance the same as Whole life insurance?
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How does universal life insurance differ from other forms of life insurance?

Universal life insurance means you will pay the same premium until death, where as with term life insurance you will pay a certain premium for a period of time and then may or not be offered the same premium again for another term.

Is permanent life insurance the same as whole life insurance?

Technically, there is no insurance policy called as permanent life insurance. However, you can treat whole life insurance policy as permanent since the policy covered the whole life span of the policy holder and benefit is payable to nominee in the event of any eventuality of the policy holder.

What are the best companies to buy whole life insurance from?

Reputable insurance companies for whole life insurance include Gerber Life, MetLife, AllState, and Mass Mutual. Check with your auto insurer if you have car insurance, because sometimes you can combine two or more insurance policies with the same insurer and get a discount.

Where can someone find information about what is the difference between whole life and term life insurance?

The basic difference between term and whole life insurance is this: A term policy is life coverage only. On the death of the insured it pays the face amount of the policy to the named beneficiary. You can buy term for periods of one year to 30 years. Whole life insurance, on the other hand, combines a term policy with an investment component. The investment could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against. The three most common types of whole life insurance are traditional whole life policies, universal and variable. With both whole life and term, you can lock in the same monthly payment over the life of the policy.

Does the cost of insurance increase in a universal life insurance policy?

It depends on the policy, but in many cases yes. Universal Life has many of the same characteristics of Whole Life insurance (i.e.- cash value)but is "technically" speaking Term Life that is renewed on a regular basis like every 5 yrs or even yearly. If you are unsure whether the price of your policy premiums will increase you can check the "cost index" page of your policy and you should be able to see if the price increases over time.

Is my life insurance whole life or term?

Review your policy ... it has to be one or the other ... can't be both at the same time.

What is permanent life insurance?

Permanent life insurance is another name for whole life insurance. It provides permanent, lifelong protection. This distinguishes it from term life insurance. Click here for more about permanent life insurance including its advantages and disadvantages. A permanent life insurance policy remains in effect for the life of the insured, with premium payments being made for the same period. Permanent insurance consists of a premium and a cash value or savings component. Like term life insurance, it pays off in the event of your death, but unlike a term life policy, it operates differently. The premiums for a permanent policy are nearly five to ten times the amount of the term life rates. A portion of these premiums go into the cash value element of the policy, and over time, these savings can grow. As the name implies, permanent life insurance is permanent - the policy is applicable for your entire life as long as you keep paying the premiums. The most common permanent life insurance policies are whole life and universal life insurance.

What is level term life insurance?

Term life insurance is the cheapest form of insurance, it insures you for a fixed number of years and the rates do not change. It is the best thing a person can do for themselves when it comes to life insurance. Whole life insurance (or Universal Life) is different, you invest at the same time as insure your life and the rates go up and down inside the policy. I would always recommend term life insurance because there are better ways to invest than whole life. Whole life should be a last resort after IRA's, 401K are all maxed out and you still want to invest. Any financial advisor would tell you the same thing. Level term life insurance provides life insurance for a specific number of years, from 1-40 years. Level term life insurance provides coverage and premiums that remain level (the same) for the entire term of the policy. Answer: Term life insurance protects your family or business for a limited amount of time that you select (1-40 or to age 65). There is a Term with Return of Premium, which will return all premiums paid at the end of term if the insured outlives the term insurance policy. For those who are looking for the cheapest permanent life insurance policy, the Guaranteed Universal Life is the best option. Slightly more expensive than term insurance, it will stay in force to age 105, 110, or to 121. Premiums are always fixed guaranteed not to change and it also guarantees to keep the policy in force to the max age selected (until age 105 is generally sufficient, unless you have a history of longevity beyond that in your family).

What is the difference between a variable whole life policy and a universal whole life policy?

Both whole life and universal life have cash values. For Whole Life -Picture a rectangle/box with a line from the bottom left corner going up to the top right corner. Everything under the line is your cash value or savings in your life insurance. The entire box is equal to your coverage amount. When you die, your beneficiary gets the box. It doesn't matter how much cash you have, they get the amount of the box. So if you have $50,000 of coverage, and you have $2000 of cash value, when you die they get $50,000 ($2000 of your cash value and the insurance company only has to pay $48,000) If you want to borrow your money, you have to pay it back at a 6-8% interest rate TO THE COMPANY. You borrow your own savings. If you die, they keep your money. And for the first 2-4 years you have your policy, you don't accumulate any cash. Your premiums cover insuance and fees. Universal life is annual renewable term plus a cash value. This gives you an option if your beneficiaries get to collect both your life insuance amount plus the cash or just the life insurance amount. Obviously, no one would choose to NOT get their money, but most don't see the choice. It is made for them. The cost of insurance goes up every year, but your premiums may stay level. Or you can increase them, it's up to you. However, there is a level term where your premiums are locked in and you don't have to worry about the cost going up every year. Eventually with flexible premium universal life, the cost of insurance is so expensive, people can't afford to keep it. The cash value will pay the premiums for only so long before there is no cash left. You're much better off to find a level term, and invest the difference (which you may increase or decrease at will). Once you have enough money saved, and little or no financial obligations (kids, mortgage, debt, etc) get rid of the life insurance. Why pay for life insurance if you have money saved and no responsibilites? Whole life insurance is a permanent life insurance. Premiums for whole life insurance are generally high and remain status quo throughout the life of the policy owner. Whole life insurance is often seen as an investment as it develops cash value over time. Whole life insurance allows the owner to dip into his insurance through loans or surrender, in times of need. A flexible universal policy is almost the same as whole life insurance but offers more flexibility for the policy holder. This kind of policy gives the policy owner flexibility to modify the insured amount, or the premiums according to changing circumstances in life.

Is privilege insurance the same as life insurance?

Privilege insurance is not the same as life insurance. To receive a better understanding of the difference between the two, it is best to contact an insurance agent.

Is a cash-value policy the same as a permanent insurance policy?

Yes, the types of permanent insurance policies - whole life and universal life - are designed to build cash value. There are permanent life insurance policies that offer guarantees over cash value accumulation, therefore staying in force until age 105, 115, 121, etc - and build very little cash value. The cost for this type of permanent insurance is often much lower than those that will build significant cash value.

Do the rates charged for life insurance remain the same throughtout your life?

Level Term policies have a level premium for the length of the term (10, 15, 20 or 30 years). After the term ends, premiums increase annually unless the policy is terminated, or converted to a permanent life policy. Whole Life policies have a level premium throughout the life of the insured. Universal Life policies premiums can fluctuate.