Differences between whole life and universal life insurance
Here’s a closer look at how whole life and universal life insurance differ:
Flexibility
One significant difference between whole and universal life insurance is that a universal life plan is more flexible. Your premium payments and death benefit can be adjusted with a universal life policy, while they can’t change with whole life insurance.3
Cost
Since the premiums and death benefit are guaranteed to stay the same, and the cash value has a minimum guaranteed rate of return,4 whole life insurance has higher premiums than universal life insurance.
Cash value accumulation
Whole life insurance comes with a guaranteed cash value over the life of the policy. Universal life insurance can also build cash value, but it may fluctuate based on factors like the way you fund it and the investments your life insurance company chooses.3
Dividends
You can receive dividends from a whole life insurance policy. If you do, you may add them to your cash value or withdraw the funds. Universal life insurance does not offer dividends.
Should I get whole life insurance or universal life insurance?
Whether you’d be better off with whole life insurance or universal life insurance depends on your unique situation. If you want your premiums, death benefit, and cash value to be guaranteed and don’t mind paying extra for this convenience, whole life insurance is likely your best bet. But if you’re searching for a more flexible policy, you might want to consider universal life insurance.
Alternatives to whole life and universal life insurance
Here are some alternatives to whole life and universal life insurance:
Term life insurance
Term life insurance will last for a limited period of time, like 10, 20, or 30 years. If you pass away before your policy expires, your beneficiaries will collect a death benefit.
Guaranteed issue life insurance
Guaranteed issue life insurance doesn’t require a medical exam. In many cases, you’ll be accepted for it if you apply and be able to support your beneficiaries financially upon your death.
Final expense insurance
Final expense insurance helps your beneficiaries pay for end-of-life costs and final expenses after you pass away. These might include medical debts and funeral and burial fees.
Simplified issue insurance
With a simplified issue life insurance plan you don’t have to take a medical exam and may get approved once you fill out several questions about your health.
Get a quote for life insurance
Both universal and whole life insurance offer lifelong coverage, but it’s wise to consider their differences when deciding on a policy. Additionally, there are plenty of alternative options to consider, such as term life and final expense insurance, if another policy would better suit your needs.
Aflac offers term and whole life insurance policies with great coverage. Both options can allow you to protect your loved ones financially in case the unexpected happens. Get a quote today!
