Universal Life:
In this type of policy you have two separate components, Insurance and Investment. Universal Life is flexible, because it gives you the option to pay just for Insurance component. If you chose to pay additional premiums, you will be funding the Investment side of the policy. Remember that there is a maximum amount of how much you can put towards investment side. If you go over that max, your policy loses tax-exempt status.
Whole Life:
In this policy, both Investment and Insurance components are combined. There is one premium that cannot be changed. There are two types of whole life: Participating – your investment side receives dividends. Non-Participating – just provides lifetime coverage.
If you are looking just for lifetime insurance coverage, Universal Life is a better option, because it is cheaper than Whole Life. If you are looking for both insurance and investment sides, Universal Life gives you flexibility in terms of premiums, compared to Whole Life.
In other words, Universal Life allows you to control the investment portion of you policy, while Whole Life does not.
In this type of policy you have two separate components, Insurance and Investment. Universal Life is flexible, because it gives you the option to pay just for Insurance component. If you chose to pay additional premiums, you will be funding the Investment side of the policy. Remember that there is a maximum amount of how much you can put towards investment side. If you go over that max, your policy loses tax-exempt status.
Whole Life:
In this policy, both Investment and Insurance components are combined. There is one premium that cannot be changed. There are two types of whole life: Participating – your investment side receives dividends. Non-Participating – just provides lifetime coverage.
If you are looking just for lifetime insurance coverage, Universal Life is a better option, because it is cheaper than Whole Life. If you are looking for both insurance and investment sides, Universal Life gives you flexibility in terms of premiums, compared to Whole Life.
In other words, Universal Life allows you to control the investment portion of you policy, while Whole Life does not.