Analyzing Universal And Whole Life Insurance

Both Universal and whole life insurance are similar, at first glance but one should never forget that there are several key differences between the two. These two are the most popular types of insurance policies sold and preferred by developed nations like the USA.

With that stated, let’s delve deeper and understand the basic differences between the two types of insurance policies – 

Universal Life Insurance

The other name for universal life insurance is adjustable life insurance and the reason is quite simple to understand. Universal life insurance offers tons of flexibility to its applicants.

It is one of the most popular types of insurance policies preferred by Americans which is why it is pretty easy to get a guaranteed universal life from Affordable Life USA. But before one does that, it would be great that they read the fine print of the policy and clarify all doubts.

How Universal Life Insurance Works

When the applicant makes timely payment of the premium for their universal life insurance policy, a part of the payment goes directly into an investment account. The interest accrued will then be credited into the personal account of the applicant. This increases the overall cash value of the policy over time.

Pros

  • Applicants are allowed to make adjustments to the face value of their coverage and that too without surrendering their policy!
  • Applicants can use the cash value of their insurance policy to pay the premiums for the same given there is enough money in the account.
  • Applicants are allowed to make the necessary changes in the death benefits offered by their insurance policy.
  • Applicants can make partial withdrawals or simply borrow from the cash value of the insurance policy.

Cons

  • The interest rate of universal life insurance policies depends on market conditions.
  • Surrender charges need to be cleared by the applicant when the same choice to close the account or make a withdrawal.

Whole Life Insurance

Whole life insurance provides coverage to the applicant for the rest of their life, given the applicant is timely paying the premiums of the policy!

In case the applicant dies, whether naturally, due to an accident or illness, the beneficiaries nominated by the applicant will be the recipient of death benefits.

How Whole Life Insurance Works

The whole life insurance policy simply combines coverage with that of savings.

Here, the insurer will put the premium payments made by the applicant to a bank account that offers high-interest rates. It can also deposit the premium payments into an investment account.

Each premium payment increases the cash value of the policy thus making it easy for the applicant to achieve their long – term goals.

Pros

  • Applicants will get guaranteed cash value.
  • Applicants can choose to cash in the dividends or allow them to accumulate over the years along with their interests.

Cons

  • This is quite an expensive variation of life insurance policy and for the right reasons. It offers level premiums, attractive living benefits as well as fixed death benefits. So it is natural for the policy to cost more!

One should also keep in mind that their appetite for risk, their family structure, and their financial condition will dictate the type of insurance policy they should go for. In case one needs more details, it is best to get in touch with a professional right away!

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