It is the responsibility of every partner or parent to protect their family financially if something catastrophic leads to their premature death. A life insurance policy provides this protection easily.
When shopping for life insurance, you will likely come across two different policy types: whole life and universal life. They sound similar, but there are differences of which you should be aware.
What is Whole Life Insurance?
If you are on a budget and need a fixed premium, whole life insurance is the policy for you. Throughout the life of the policy, you will pay the same amount year after year. You can also accumulate a cash value on your policy over time. Many insurers will allow you to borrow against the policy once it has reached a certain value.
What is Universal Life Insurance?
Unlike whole life’s fixed payments, universal life premiums offer premiums that are more flexible. Though you will always have a minimum to pay to keep the policy active, you can adjust how much you pay per year by taking advantage of the premiums cash value.
Universal policies may also earn more than whole life policies because insurers may credit any excess interest it has earned during a particular fiscal period to your policy. The other side is also possible. In this way, a universal policy fluctuates much like the stock market.