While both policies are similar, the main difference is that a Whole Life Insurance policy has level premiums and benefits (not including the cash value portion of the policy), whereas the coverage and costs of a Universal Life Insurance policy can be changed year to year. GUL policies come with a guaranteed premium, guaranteed death benefit, and guaranteed interest (usually 3%) on the cash value. When I was appx 40 years old I put in place $1,000,000 term life, 20 year level premium, for $610/year. Whole life insurance offers consistent premiums and guaranteed cash value accumulation, while a universal policy provides flexible premiums and death benefits. If you are going to go with a universal life policy, it makes more sense to get a fully variable one. Term Insurance – The Bottom Line. If you post that in your initial question above by editing it you'll get a lot more specific answers from us. They're large solid companies with very cheap expense fees on their funds, and all their funds are no load, and they'll help you open the funds and pick the appropriate index funds. If the policy performs well, there are chances of potential growth in your savings fund. Whole life and universal life insurance are both types of permanent life insurance. And what is the difference between the two? Got your addt'l edited info; thanks. Whole life insurance gives a policyholder lifetime coverage and a guaranteed amount to pass on to beneficiaries, so long as the contract is up to date at the time of the policyholder’s death. I so don't understand. Accessed April 26, 2020. What are the different types of permanent life insurance policies? We recently had a baby, and the life insurance is a huge chunk of our budget right now. If you would like a whole life policy vs. a variable universal life policy. The premiums are flexible, but not necessarily as low as term life insurance. Whole and Universal life insurance fall into the same category—Permanent life policies. How does the policy build cash value? Universal life insurance is a type of permanent life insurance coverage consisting of two parts: an investment account and a death benefit. "Life Insurance Basics." Sales of indexed universal life insurance have been booming, but buyers may have been sold on policy projections that won't come true. I'm a real estate guy, but I use life insurance to boost my investments. These policies have two main parts—and investment portion and an insurance portion. Keep your insurance and your investments separate - you'll save money and have much more liquidity that way. One of the features of this type of life insurance is that it combines coverage with savings. Whole life insurance and universal life insurance both have a cash-value component. There are two types of life insurance that will work with a LIRP; universal life insurance (the kind that is indexed) and whole life insurance (we recommend the 10 pay plan). Regretfully, you’ll find as many people favoring indexed universal life as you will that favor whole life (only participating whole life). Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. And universal life insurance has given whole life insurance a bad rap. The most common type of insurance is health insurance. As a result, universal life insurance premiums are typically lower during periods of high interest rates than whole life insurance premiums, often for the same amount of coverage. Nothing fancy needed. We have enough in savings to last us a whole year if he lost his job and we have a emergency fund as well. What is indexed universal life insurance? It may take several years to build up much cash value in the policy. 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